What is the trial balance?
The trial balance, for its part, is a document which presents all the assets and liabilities of the company, but without distinction between stable elements and variable elements. The trial balance is established at a given time, generally at the end of each accounting year. It allows you to know the financial situation of the company by specifying its assets, debts and available cash flow. The trial balance is not one of the mandatory accounting documents. It does not have a predefined date, it can be carried out every month, quarter or year.
What are the elements of the general balance?
Mandatory information
In the general balance, we find a minimum amount of information:
- The wording
- Account number
- Total credit and debit transactions
- The account balance (creditor or debit)
Accounts identified
The general balance includes the balance sheet accounts and management accounts including:
- Class 1: Capital accounts
- Class 2: Fixed asset accounts
- Class 3: Inventory and work-in-progress accounts
- Class 4: Third party accounts
- Class 5: Financial accounts
- Class 6: Expense accounts
- Class 7: Product accounts
Understanding the trial balance
The trial balance allows the business manager or accountant to check his accounts. Firstly, the general balance must be balanced, the credit must be identical to the debit. If the result obtained is unbalanced, this is an error that must be rectified before the close of the accounting year. Secondly, the trial balance can be used to prepare VAT returns. It promotes reconciliation between the sums declared and those appearing in the accounts, it therefore makes it possible to control the results and avoid errors.
What is the difference between the balance sheet and the general balance?
The balance sheet and trial balance are two accounting documents that present the financial situation of a company. However, there is an important difference between these two documents.
The balance sheet is an accounting statement which summarizes, at a given moment, the assets of the company. It presents all of the company’s assets and liabilities, distinguishing between stable elements (fixed assets) and variable elements (current assets). The balance sheet makes it possible to determine the net worth of the company, that is to say the difference between assets and liabilities.
The difference therefore comes from the fact that the balance sheet is an accounting statement which allows us to know the assets of the company, while the general balance is a document which presents the financial situation of the company by distinguishing its assets and its passives.