Difference Between Ledger and Trial Balance
Although ledger and trial balance are both integral parts of the same accounting cycle, there is still a considerable difference between ledger and trial balance. They both have their respective relevance and timing in the business cycle. In short, a ledger is an account wise summary of all monetary transactions, whereas a trial balance is the debit and credit balance of such ledger accounts.
Traditionally a ledger was prepared in a physical book with a separate page for each account and a trial balance was derived from these accounts. In modern days, all the data is stored in ERPs with the help of computers.
Ledger Vs Trial Balance in Table Format
| Ledger | Trial Balance |
| A ledger is an account wise summary of all monetary transactions maintained in a classified form. | It is a statement of debit and credit balances that are extracted from ledger accounts at a specified time. |
| It is also known as the principal book of accounts and book of final entry. | There is no formal synonym of a trial balance, however, it is informally referred to as TB. |
| Ledger acts as a foundation to create a trial balance for the business. | Trial balance acts as a foundation to create financial statements for the business. |
| It is essentially a summarized form of all journal entries. | It is essentially a summarized form of all ledger accounts. |
| Details of what is a ledger and a sample format are also provided here. | Details of what is a trial balance and a sample format are also provided here. |
| There are different types of ledgers such as Debtor’s ledger, Creditor’s ledger, General ledger, etc. | There are no subtypes of a trial balance. An adjusted trial balance is made to fix partial & improper transactions. |
Stage Within an Accounting Cycle
Ledger – It is prepared after recording journal entries, consequently, it acts as a support to prepare the trial balance.
Trial Balance – It is the next step after adjusting and closing the ledger accounts, therefore acting as the groundwork for the preparation of financial statements.
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