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Balance Sheet X Trial Balance

Reading time: 4 minutes

Understand the difference between balance sheet and balance sheet, and its importance in your Company’s strategic planning.

Understand the Balance Sheet

The balance sheet is a type of report prepared by the accounting department of a company, in which, according to all the financial transactions carried out in a period, the calculated balances are presented. This document is prepared using the records of accounting facts that must be recorded in the company’s journal. Therefore, the entire financial history of a business is consolidated there and the balance sheet serves, finally, to demonstrate it. The document is essential for the company to be aware of the situation of its assets, which is, in absolute terms, everything it has and everything it owes. essential for the company to create and also for it to carry out its financial planning.

Understand the balance sheet

The balance sheet essentially consists of the following information:

  • Results of a period;
  • Balance on the date on which the calculation begins;
  • Amounts that were debited from the company’s account in the period calculated;
  • Sum of entries that the company account had in the period calculated;
  • Calculation of the final balance of entry and exit operations in the period determined.

Information can be presented in different ways, so that the company’s needs are also met, and the consolidated form of presentation can also be noted as a difference between balance sheet and trial balance. Another difference between balance sheet and trial balance is the fact that, in the case of the second, there are two ways of preparing the document: open and closed.

While the open balance sheet shows the balance sheet accounts of the company and its results in a period of time that is, necessarily, less than one year, the closed balance sheet is only created at the end, in fact, of the year, when the accounts are closed. and the results. Thus, the document presentation format is different, since the calculation time is different.

Difference between Balance Sheet and Trial Balance

The main difference between balance sheet and trial balance is related to their periodicity, we can also observe that both documents are aimed precisely at identifying financial health. In other words, both documents are essential in financial planning, the difference is in the coverage in the study and evaluation periods, where the Balancete is carried out over a long period.

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