Did your accountant only provide you with a trial balance and now you're wondering why the Equity plus (+) Liabilities account doesn't equal to your Assets on the trial balance ?
The difference between a balance sheet and trial balance is the trial balance does not include the current earnings balance from your Income Statement.
The trial balance lists the balances of all accounts as at a specific date but it does not net out the difference between the revenue and expenses.
Let's explore our sample trial balance. Note that the below screenshots are broken up by account group:
To manually calculate your Current earnings, tally up the total revenue and then subtract the total expenses.
Total Owners Equity from the trial balance plus Current Earnings totals (from the Income Statement) will equal 2,292,862.29
What's missing from the trial balance in order to make a balance sheet is the Current Earnings.
You can only find the Current Earnings on the Income Statement or a Balance Sheet if you have one or you can minus the sum of Expense accounts from the Revenue accounts. We can now conclude the following:
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That's all for now, thanks for reading!
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