Balance sheet and Profit or Loss Account

Balance sheet:

A Balance Sheet may well be described as a ststement of assets and liabilities including capital amount.It reveals the assets and liabilities and capital amount as on a periodic of time.It highlighys the asseys possessed by a business and sources of funds used in periodic change rather than continuous one.In this sense it is statics where as business is dynamic.

Profit or Loss Account:

The income statement and profit or loss account are not different but are interchaneably used.Where as in U.S.A.income statement is a popular usage in U.K.it is more commonly referred to as profit and loss account.According to AICPA terminology,income statement is defined as a statement which shows the principal elements the positive and negative in the derivations of income or loss the claims against income and the resulting net income or loss of accounting unit.It simple words an income statement shows revenue and expences of an accounting period.It matches revenue with cost.If the revenue exceeds the cost it implies the profitability of business and of cost exceed revenue it implies the loss suffered by the business.The same view hass been expressed by HARAY &GUTHMAN when he wrote that "the statement of profit or loss is condensed and classified record of gains and losses causing changes in the owners interest in the business for a period of time.