Banking Exam Question - What is Profit & Loss Account and Balance Sheet? What are it's Main Differences? Explain

Introduction - Difference between Profit & Loss Account and Balance Sheet

Profit & Loss Account:

A salary proclamation or benefit and misfortune account (likewise alluded to as a benefit and misfortune articulation (P&L)is one of the budgetary explanations of an organization and demonstrates the organization's incomes and costs amid a specific period. It shows how the incomes (cash got from the offer of items and administrations before costs are taken out, are changed into the net salary. The motivation behind the pay articulation is to indicate administrators and financial specialists whether the organization profited amid the period being accounted for. 

Balance Sheet:

An accounting report is a monetary proclamation that condenses an organization's benefits, liabilities and investors' value at a particular point in time. These three asset report fragments give financial specialists a thought regarding what the organization claims and owes, and additionally the sum contributed by investors. An independent company monetary record records current resources, for example, money, money due, and stock, settled resources, for example, land, structures, and hardware, immaterial resources, for example, licenses, and liabilities, for example, creditor liabilities, accumulated costs, and long haul obligation.

The Difference between Profit & Loss Account and Balance Sheet are as follows:

Profit loss account (P & L A / C)

1) This is an unrealistic account. It is prepared based on the principle of accounting.

2) Expenses are made to credit and income in Credit (Cr).

3) Status of profit loss is detected.

4) Dr - Cr is justified.

5) This requires a wrench entry.

6) All loss in capital is terminated for profit loss.

7) Benefits of profit earnings can be achieved.

Balance Sheet

1) This is a report. It does not follow the principle of accounting.

2) Right on the property side and liability in the left side are related related titles.

3) is done to find the economic condition of the business.

4) Property = Liability must be but should not be different.

5) This does not require the awesome Entry.

6) It is used to make a plant at the beginning of the new year.

7) Information about business progress or happiness can be found.