What is the difference between profit and loss and balance sheet?

Question

Accepted Answer

Profit and loss statement shows revenue and expenses while balance sheet shows assets, liabilities and equity.

Profit and loss statement shows the financial performance of a company over a period of time, usually a year.
It includes revenue, expenses, and net income or loss.
Balance sheet shows the financial position of a company at a specific point in time.
It includes assets, liabilities, and equity.
Profit and loss statement is used to determine the profitability of a company while balance sheet is used to determine the financial health and stability of a company.
For example, if a company has a high net income on its profit and loss statement but a high amount of debt on its balance sheet, it may not be financially stable in the long term.

Accepted Answer

The Balance Sheet is a statement of assets, liabilities and capital, whereas the Profit and Loss account is a statement of income and expenses

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