Difference Between Balance Sheet And Income Statement With Similarities

Both Income Statement And Balance Sheet have great importance in analyzing the financial information of enterprise for different accounting periods whether they relate to the past, current or future accounting periods. Here, we will study the main difference exists between Income Statement and Balance Sheet in accounting.

1. Income Statement shows financial performance or Net Profit / Net Income for the accounting period while Balance Sheet shows financial position of the business on a particular time.

Also Check Out, “Relationship Between Income Statement And Balance Sheet”

2. Income Statement proceeds the balance sheet i.e., it prepares before the preparation of Balance Sheet.

3. Income Statement is prepared for the accounting period and shows the financial performance for current period only while Balance Sheet shows the financial performance only on particular time i.e. on 31^st December what is the balances of Assets, Liabilities and Equity and on the same day after some time the situation may be different due to purchase and sale of inventory and other reasons.

Similarities Between Balance And Income Statement

1. Both Income Statement and Balance Sheet are financial statements and presented on Annual Reports to Users of Financial Statements.

2. Either a company is financially performing well or not it can be checked by investors by getting reliable information about different Accounting Ratios that are calculated from the information of Income Statement and Balance Sheet.

So, Income Statement shows Financial Performance by determining Net Income / Net Profit for the period while Balance Sheet shows Financial Position on a particular time for Assets, Liabilities and Equity of the business.