Is a balance sheet the same as a P&L?
A balance sheet is a financial report about the financial position of an entity. It is a list of the assets, liabilities, and equity of an entity as at a particular date. It is a financial document that keeps up-to-date to the owners and other stakeholders about the company financial standing. Statement of financial position is particularly important to: Know the net worth of the business Determine the working capital of the business See if the entity Can sustain future operations Defend from tax proceedings Identify the rate of dividend Know if your business qualifies for bank loans On the other hand, the income statement ( profit or loss account) is a financial document providing detailed information about revenues, expenses, and profit or loss for a specific period. It helps users of the income statement to assess and measure the financial performance of an entity. We also know it as a statement of profit or loss. The main objective of the income statement is to assess the profitability and financial performance of the entity. It also helps to predict the future performance of the entity. Accountants prepare it for a specific period (i.e., for the month, for the year) There are three major components of the income statement: revenues, expenses, and profit or loss.