What is the difference between Trail Balance, Income Statement and Balance sheet ?

Question

Accepted Answer

Trail balance is a list of all ledger accounts, income statement shows revenue and expenses, balance sheet shows assets and liabilities.

Trail balance lists all ledger accounts and their balances
Income statement shows revenue and expenses for a specific period
Balance sheet shows assets, liabilities and equity at a specific point in time
Trail balance is used to ensure that debits and credits are equal
Income statement helps in determining the profitability of a business
Balance sheet helps in determining the financial position of a business
Example: Trail balance - Cash account balance is $1000, Income statement - Revenue for the month is $5000, Balance sheet - Total assets are $10,000 and total liabilities are $5000

Top American Broadcasting Company Accountant interview questions & answers