The difference between the general ledger and trial balance

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What is a General Ledger?

A general ledger is the master set of accounts that summarize all transactions occurring within an entity. The general ledger is comprised of all the individual accounts needed to record the assets, liabilities, equity, revenue, expense, gain, and loss transactions of a business.

What is a Trial Balance?

The trial balance is a report run at the end of an accounting period, listing the ending balance in each general ledger account. The report is primarily used to ensure that the total of all debits equals the total of all credits, which means that there are no unbalanced journal entries in the accounting system that would make it impossible to generate accurate financial statements. The initial trial balance that is run at the end of an accounting period is called the unadjusted trial balance. This report is nearly always adjusted with a variety of adjusting entries that are used to bring a company’s accounting records into compliance with the applicable accounting framework (such as GAAP); this is called the adjusted trial balance.

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Comparing the General Ledger and Trial Balance

There are a number of differences between the general ledger and trial balance, which are as follows:

  • Amount of information. The general ledger contains the detailed transactions comprising all accounts, while the trial balance only contains the ending balance in each of those accounts. Thus, the general ledger may be several hundred pages long, while the trial balance covers only a few pages.

  • Usage. The general ledger is used as the main source of information by financial accountants when they are investigating accounts. The trial balance has a much more limited use, where the totals of all debits and credits are compared to verify that the books are in balance.

  • Auditor usage. The auditors request a copy of the trial balance as part of their year-end audit, so that they have final balances for all accounts. They use the general ledger for a different purpose, which is to trace balances back to individual transactions.

  • Nature of information. The general ledger is considered to be a database of information about accounting transactions, while the trial balance is really just a report that is derived from the general ledger.