Differences Between General Ledger vs Trial Balance
There are various accounts and accounting terms that are used in the accounting world, which are of different nature and character. One of those accounts is General Ledger and Trial Balance which is widely used in every company to reconcile and close the books of accounts at the end of each period. In this article, today, we will try and understand the difference between General Ledger vs Trial Balance and their nature and working.
Head to Head Comparison (Infographics)
Below is the top 8 difference between General Ledger vs Trial Balance
Key Differences between General Ledger vs Trial Balance
Let us discuss some of the major differences between General Ledger vs Trial Balance:
- The major and the key difference between General Ledger vs Trial Balance is that the trial balance only shows the ending balance of each general ledger account. The trial balance shows or depicts the summary for each account balance and is an internal document. On the other hand, General Ledger provides detailed transaction details for each account build or outstanding in the company for a particular financial period.
- Ledger is created from the journal entries or the books of accounts which is extracted from tally software generally or any other software in a particular company. It is basically a summarized form of all the journal entries passed in a company for a particular period. Trial Balance, on the other hand, is made from the ledger balances and works on the principle of Debit and credit and shows the closing balance of each account which is then used for the preparation of final accounts in a company.
- There are various kinds of ledger accounts currently used in a company general ledger, creditors ledger, debtor ledger, etc. On the other hand, there is no subset that is generally used in a trial balance account. However, it is evident that in some companies which are principal of debt and credit does not match there is an adjustment account or suspense account which is opened in a trial balance.
- Another major difference between both is that Ledger is a foundation of trial balance as all the ledger balances of all the accounts prepared comes into the trial balance for the preparation of final accounts whereas, on the other hand, Trial balance plays no major role in the preparation of ledger basically trial balance preparation is the next step after the preparation of ledgers balances for a particular period.
- Ledger is basically a database of all accounts consolidated at one place where trial balances is actually a report of expenses and revenue of a company and are also used in a detailed financial analysis of a company for a particular period. A trial balance is basically a report which is derived from the general ledger balances, i.e. the closing balances of all accounts.
General Ledger vs Trial Balance Comparison Table
Let’s look at the top 8 Comparison General Ledger vs Trial Balance.
|Ledger is also known as principal books of accounts or book of final entry.||There is no formal nomenclature that is used for Trial Balance which is generally used.|
|Accountants of the company use ledger balances while they are investing in the accounts.||Trial balance has much of a limited use all it is just used to analyze that all the balances are in place.|
|Ledger is basically used to trace back to the individual accounts and transactions that have taken place during a period.||Trial Balance is a report of all the accounts in a summarised manner.|
|The Ledger report is generally many pages long when compared with Trial Balance.||Trial Balance is short in length when compared with Ledger Balances and accounts.|
|There is no suspense account in the ledger.||The trial balance may or may not contain a suspense account.|
|Ledger balances are in detail.||Trial Balances are in a summarized form.|
|Ledger is the next step after the journal.||Trial Balance is made with the help of a ledger.|
|The ledger can be analyzed in detail.||Trial Balance cannot be analyzed in detail.|
In older times, the ledger was prepared physically and was done manually for each account, but with time it has evolved in electronic form, and now all data is stored in ERP portals. Both are an integral part of accounting thought and serves as a lifeline of every accountant.
This has been a guide to General Ledger vs Trial Balance. Here we will also discuss the Key Differences with Infographics and Comparison Table. You may also have a look at the following articles to learn more –