Similarities & Differences Between / Among Trial Balance And Profit And Loss Account And Balance Sheet With Relationship

A Trial Balance shows the finalized closing balances of Different Types of Accounts before Adjustments, after Adjusting Entries and Closing Entries are recorded while the Profit and Loss Account or Income Statement shows the lists of Revenues And Expenses in order to match these Temporary Accounts to find out the Net Income / Net Profit or financial performance of the business for the accounting period. A Balance Sheet shows the financial position of Permanent Accounts’s balances (Assets, Liabilities & Equity) on a particular time.

Trial balance is the based for the preparation of Financial Statements while Profit And Loss Account provides Net Income or Net Loss to be added or deducted from Capital or Equity on balance sheet while balance sheet shows the financial position of the business due to the initial operations or activities & performance performed by the management of the company to operate the business successfully.

Similarities Between / Among Trial Balance And Profit And Loss Account And Balance Sheet

All of these are important branches for the completion of the Steps of Accounting Cycle.

All of these are the requirements of International Accounting Standards in order to provide reliable, accurate and true information to the Users of Financial Statements.

Relationship Between / Among Trial Balance And Profit And Loss Account And Balance Sheet

There is a strong relationship exists between Trial balance, Profit and Loss Account / Income Statement and Balance Sheet. Missing of any of these will provide unreliable, inaccurate and false information. For example, if the trial balance is not balanced or if there is any mistake or error found in the trial balance which is transferred to Profit and Loss Account and Balance sheet, then we cannot get accurate, true and reliable results from these Financial Statements.