Difference Between Profit & Loss Account and Balance Sheet
The following differences are observed between the Profit & Loss Account and Balance Sheet.
Profit and Loss Account
|It is an account.||It is a statement of assets and liabilities. it is not an account.|
|It is the second stage of Final Accounts. It
is prepared before the Balance Sheet.
|It is the last stage of Final Accounts. It is prepared after the Profit & Loss Account.|
|It is prepared for a period of time. So its heading will be: Profit & Loss A/c for the year ended 31.12.2019.||It is prepared at a point of time. So its heading will be: Balance Sheet as of 31.12.2019.|
|Its object is to ascertain true profit or loss of business.||Its object is to ascertain the true financial position of the business.|
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.