Difference between Profit and Loss Account and Balance Sheet
Difference between Profit and
Loss Account and Balance Sheet
|
Basis |
Profit
and Loss Account |
Balance
Sheet |
|
1. Nature |
It is an account. |
It is a statement. |
|
2. Period |
It is prepared for an accounting period |
It is prepared at the last day of the accounting
period. |
|
3. Recording |
It records only income and expenses of the concern. |
It records only assets and liabilities of the
concern. |
|
4. Profit/Financial Position |
It shows performance of the business, i.e., profit
earned or loss incurred by the business. |
It shows the financial position of the business. |
|
5. Accounts |
Accounts that are transferred to the Profit
and Loss Account are closed. |
Accounts that are transferred to Balance Sheets are not closed. |
|
6. Balance |
Balance of this account is transferred to
the Capital Account in the Balance Sheet. |
Balance of this statement becomes the opening
balances for the next period. |
HLASS11-12th
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