Accounting
Understanding Trial Balance, Profit and Loss and Balance Sheet
These three reports are connected, but each answers a different question. Reading them separately helps owners avoid making decisions from sales alone.
On this page
Trial Balance: do the ledgers agree?
A Trial Balance lists the debit and credit balance of every ledger account. If total debits equal total credits, the entries are at least arithmetically consistent. It is a review point for the ledger structure and entries; it is not, by itself, a profit report, and a balanced Trial Balance does not prove every entry is correct.
Profit and Loss: what happened over a period?
A Profit and Loss report compares income and expenses over a selected period, such as a month or a financial year. Useful review questions:
- Did gross margin change compared with the previous period?
- Which expense heads moved the most?
- Did returns, discounts or write-offs affect the result?
- Does the cost of goods sold look reasonable against sales? See inventory valuation and COGS.
Balance Sheet: what is the position at a date?
A Balance Sheet presents assets, liabilities and equity at a point in time. For a pharmaceutical business it connects closing stock, customer receivables, supplier payables, cash or bank balances and other balances to the wider financial position.
Review them together
A practical sequence is: check the Trial Balance first, read the Profit and Loss for performance, then read the Balance Sheet for position. Differences between reports usually trace back to incomplete purchase, return or payment entries, which is why record discipline matters more than the report itself.
How MAYA ERP fits
MAYA ERP includes ledgers, Trial Balance, Profit and Loss and Balance Sheet, drawn from the same transactions as billing and stock. Confirm accounting setup with your accountant, then see accounting software.
Frequently asked questions
What is the difference between a Trial Balance and a Balance Sheet?
A Trial Balance lists all ledger balances to check debits equal credits. A Balance Sheet presents assets, liabilities and equity at a date.
What does a Profit and Loss report show?
Income and expenses over a selected period, and therefore the profit or loss for that period.
Why might the reports look wrong?
Missing or late purchase, return and payment entries are the most common cause. Fix the source records first.
See it with your own workflow
Bring your own purchase, sales, return and reporting scenarios and see them end to end.