An income statement represents a period of time (the length of this period may vary), whereas a balance sheet reflects finances at one particular point in time. Whereas the income statement lists all of a business’s income and expenses over a period of time, the balance sheet presents a snapshot of the company’s finances.Continue Reading
A balance sheet and an income statement are two basic financial statements that contain essential business information. The balance sheet, also called the statement of financial position, provides an overview of the business’s financial standing. It reports three items: assets, liabilities and owner’s equity. Assets refer to properties of value owned by the business. Liabilities are financial obligations of the company. The value of the company to shareholders is called the owner’s equity.
The income statement, also known as the profit-and-loss statement, determines how much money a company made or lost over a period of time. This is aided by breaking earnings and expenses down into categories. An income statement can be annual or quarterly. An annual statement contains information for the whole year, whereas a quarterly statement covers three months. Revenues are recorded in the credit account on the income statement with expenses recorded as debits.Learn more about Accounting