Question

Differenciate between Profit and loss account and Balance sheet.​

Answer 1

Answer: The two important parts of the financial statement are the Balance Sheet and the Profit & Loss account. Without the preparation of these two entities the financial statement cannot be reported, even the readers of the statement are not able to clearly understand the company’s position. Hence, due regard is to be given by every company in the preparation of the two. However, people don’t understand them very clearly and have problems distinguishing the two terms.

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