Balance Sheet vs Profit & Loss Account

A Balance sheet is a precise representation of the assets, equity and liabilities of the entity. This is outlined by every enterprise, a partnership enterprise or sole proprietorship firm. It reveals the financial security of the enterprise.

There are 2 titles in a Balance Sheet. Namely – assets (inventory, accounts receivable), equity (share capital, capital surplus) and liability (accounts payable, customer deposits). The liabilities title will cover the shareholder’s equity and all the current and non-current liabilities and all the current assets and the non-current assets of the enterprise are met whilst the equity.

What is Profit and Loss Account?

P&L a/c which also called a statement of revenue and expenses or an income statement. The account depicts the financial production of the enterprise in a specific time.

This article is a ready reckoner for all the students to learn the difference between the Balance Sheet and Profit & Loss Account.

Basis Balance Sheet Profit & Loss Account
Meaning A Balance sheet is a precise representation of the assets, equity and liabilities of the entity. This is outlined by every enterprise, a partnership enterprise or sole proprietorship firm. It reveals the financial security of the enterprise. P&L a/c which also called a statement of revenue and expenses or an income statement. The account depicts the financial production of the enterprise in a specific time.
What is it? The balance sheet is a statement P&L a/c is an account
Depicts The financial status of the enterprise on a specified date. Either profit or a loss endured by an enterprise for the accounting period.
Preparation Outlined during the last day of a financial year. Outlined for the financial year.
Data revealed The capital of SH (shareholders), Assets and liabilities. Gains and losses, incomes, expenses.
Sequence A balance sheet is outlined for the preparation of the P&L a/c. A P&L a/c is outlined before the balance sheet is prepared.

The above mentioned is the concept, that is elucidated in detail about ‘Difference between Balance Sheet and Profit & Loss Account’ for the Commerce students. To know more, stay tuned to BYJU’S.

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