What is difference between balance sheet and income statement?

Banking & FinanceManagementCompanies/Organisations

The major differences between balance sheet and income statement are as follows −

Balance sheetIncome statement
  • Assets, liabilities and equity.

  • Helps in deriving liquidity of a firm.

  • Prepared in last day of accounting period.

  • Accounts transferred are not closed

  • Balance will become opening balance for next period.

  • Current ratio, quick ratio, cash ratio, receivable turnover ratio, inventory turnover ratio, payable turnover ratio, return on assets are calculated.

  • It is also named as statement of financial position

  • It has narrow scope.

  • Revenues and expenses.

  • Helps to take decisions in any operational or financial issues.

  • Prepared for accounting period.

  • Accounts transferred are closed.

  • Balance is transferred to capital account in balance sheet.

  • Gross margin, operating margin, net margin, operating leverage and financial leverage are calculated.

  • It is also named as profit and loss account.

  • It has wide scope.

raja
Published on 24-Jul-2020 06:44:12
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