What is the Difference Between General Ledger and Trial Balance?

The main difference between a General Ledger and a Trial Balance lies in their purpose, content, and structure. Here are the key differences:

1. Purpose: The General Ledger is the foundation of a company's double-entry accounting system, storing and organizing all financial transactions, including assets, liabilities, owners' equity, revenues, and expenses. On the other hand, a Trial Balance is a report derived from the General Ledger, listing all General Ledger accounts and their balances. It is used to ensure that the total debits equal the total credits, verifying that the books are in balance.
2. Content: The General Ledger contains detailed transactions comprising all accounts. A Trial Balance, however, only contains the ending balance in each of those accounts.
3. Structure: The General Ledger is a database of information about accounting transactions, with each account containing detailed transaction data. In contrast, the Trial Balance is a report that lists the account names and their balances from the General Ledger, with debit balance amounts in one column and credit balance amounts in an adjacent column.
4. Usage: The General Ledger is used as the main source of information by financial accountants when they prepare financial statements, such as the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement. The Trial Balance, on the other hand, has a more limited use, being compared to the total of all debits and credits to verify that the books are in balance.
5. Preparation: The General Ledger is prepared by recording transactions as journal entries to sub-ledger accounts. The Trial Balance is prepared by listing the ending balance in each General Ledger account.

Comparative Table: General Ledger vs Trial Balance

Here is a table that highlights the differences between a General Ledger and a Trial Balance:

In summary, the general ledger provides a comprehensive record of a company's financial activities, while the trial balance is a summary of the ending balances of all accounts. The general ledger is used to create financial statements and trace balances back to individual transactions, whereas the trial balance is mainly used to verify that the total of all debits equals the total of all credits.