Where do the Numbers for Balance Sheets Come From?
The numbers in the balance sheet come from specific account balances in the general ledger summarized by the trial balance worksheet. The preparation of the trial balance pulls balances from all ledgers at the end of every reporting period. The worksheet balances the company's debits and credits and ensures entries are mathematically correct. The entries from the trial balance worksheet transfer to other financial statements, including the balance sheet, to further display and compile these totals. The balance sheet does not use all accounts. It uses only those accounts classified as assets, liabilities, or equity. |
Accounts used in the balance sheet do not close or return to zero in the beginning of each period. These accounts continuously accumulate information. For example, the accounts receivable account remains open from period to period because customers still owe money, regardless of period closure. If this account closes or zeros out, then nobody owes any money, which does not make sense. |
