A Balance sheet is a report that draws all account details and values from the Trial balance to display in a format to immediately identify the value of what a business owns (Assets) and what a business owes (Liabilities)
The accounts and values on the Trial balance are grouped into other descriptions and arranged in a Balance sheet format. A Trial balance has a purpose as described on this website and a Balance sheet uses all the accounts and values of the Trial balance for a different purpose.
The primary purpose of a Balance sheet is to easily view the value of what a business owns (Assets) and what a business owes (Liabilities)
Always remember that a Liability for a business will always be an Asset for whoever the business owes. Example: A debit on the business bank statement is a debit for the bank (Asset) and a credit for the business (Liability) and vice versa.
Using the same example Trial Balance that is used throughout the information tabs on this website, I will show you how the Balance sheet is “put together” from a Trial balance.