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Let me know the Similarities/Differences Between Profit & Loss Account and Balance Sheet. Thanks
The balance sheet (financial positions ) is to show what acompany owes,controles and owes on aspecific date.and prepared as at adate and all permanent accounts.the income satement(profit&loss) is asummary of exepens and incom of abusiness during acertain period and prepared as at certain date.and all temporary accounts.
The profit and loss statement reports a company's revenues, expenses, and most of the gains and losses which occurred during the period of time specified in its heading.
Balance sheet also called statement of financial position provides information about an entity’s assets, liabilities and owners’ equity as well as their relationship to each other at a point in time. The balance sheet is a picture of what the company owns and owes at a particular point of time. (Usually end of a period)
Balance sheet is financial position of entity at particular date profit and loss is financial performance of particular period between 2 dates. the net result of profit and loss will be part of balance sheet as retained earnings.
Financial statements (or financial report) is a formal record of the financial activities and position of a business, person, or other entity. ... A balance sheet, also referred to as a statement of financial position, reports on a company's assets, liabilities, and owners equity at a given point in time.
Income Statement represents the income and expenses over a period of time.The primary purpose of the IS is to represent the profit/loss earned over a period of time. It shows that how much revenue is earned and how much expenses are incurred. As expenses are categorized, managers can easily identify the sources of profits or loss. The timeframe for which IS is prepared should be clearly mentioned.The words use for the IS to represent the time period are " For the YE, For the PE" depending on the time frame.
On the other hand, BS represents the snapshot of the company's finances. It consists of three items. Assets, Liabilities, and Equity.It gives the idea that how the company stands financially. It represents the finances at one specific point in time.The balance sheet date and amounts shown on BS must be accurate according to that specific point in time.The words used on BS for time frame are " as at ... " to represent the specific point in time.
The best Answer added by: MUHAMMED MALIK Senior Financial Accountant 3 days ago.
Financial statements for an entity mainly include Income Statement, Balance Sheet, Statement of Retained Earnings and Cash Flow Statement.
Income statement provides a clear picture of expenses and revenues for a month, quarter, semi annual and annually.
Balance sheet provides the information regarding the strength of an entity for a particular period of time.
Statment of Retained Earnings is a statement that describes the changes in retained earning for a particular time period
Cash flow is the summary of operating, investing and financing activities
Financial Statements usually include income statements, balance sheets, statements of retained earnings and cash flow. The three basic financial statements are the (1) balance sheet, which shows firm's assets, liabilities, and net worth on a stated date; (2) income statement (also called profit & loss account), which shows how the net income of the firm is arrived at over a stated period, and (3) cash flow statement, which shows the inflows and outflows of cash caused by the firm's activities during a stated period.
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