Income Statement Versus Balance Sheet Accounts

The balance sheet reveals the status of an organization s financial situation as of a specific point in time while an income statement reveals the results of the firm for a period of time.

Income statement versus balance sheet accounts. Therefore one side of every sales and expense entry is in the income statement and the other side is in the balance sheet. Income statement is one of the financial statements of the company which provides the summary of all the revenues and the expenses over the time period in order to ascertain the profit or loss of the company whereas balance sheet is one of the financial statements of the company which presents the shareholders equity liabilities and the assets of the company at a particular point of time. The balance sheet shows a company s total value while the income statement shows whether a company is generating a profit or a loss. Preparing a balance sheet is similar to preparing an income statement with three major differences.

You can t record a sale or an expense without affecting the balance sheet. The income statement and balance sheet are inseparable but they aren t reported this way. A balance sheet shows one point in time whereas the income statement shows a company s performance over some time usually a quarter or year. For example the period may be a month a quarter or a year.

An income statement shows revenues and expenses over a period of time. Unlike an income statement the full value of long term investments or debts appears on the balance sheet. An income statement is one of the financial statements of a company and shows the company s revenues and expenses during a particular period of time. In financial accounting a balance sheet is a summary of the financial balances of a company at a given point in time.

Below you will find few points showing the difference between the income statement and balance sheet. The name balance sheet is derived from the way that the three major accounts eventually. Instead of revenue you add up your assets instead of expenses you add up your liabilities instead of net profit when you subtract your liabilities from your assets you get your owner s equity. They are important yet very different.