What is balance sheet and how it is different from profit and loss?
What is balance sheet and how it is different from profit and loss?
What is Profit and Loss Account?
| Balance Sheet | Profit & Loss Account |
|---|---|
| What does it represent? | |
| It represents the financial state of the business concern at a particular date | It represents the profit earned or the loss incurred by a business concern during an accounting period |
| What does it disclose? |
Does the profit and loss match the balance sheet?
The Balance Sheet report shows net income for current fiscal year and it should match the net income on the Profit & Loss report for current fiscal year.
What comes first balance sheet or profit and loss?
After you generate your income statement and statement of retained earnings, it’s time to create your business balance sheet. Again, your balance sheet lists all of your assets, liabilities, and equity. Your total assets must equal your total liabilities and equity on your balance sheet.
Where is profit and loss posted in a balance sheet?
A net loss or profit for the period/year is part of retained earnings (accummulated losses), shown under owners’ equity in the balance sheet.
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