Difference b/w Income Statement and Balance Sheet

Balance Sheet: It states the financial position of a company that shows the long term assets, cash, inventory, accounts receivable, short term investments, liabilities, and capital of a company at the end of an accounting period or fiscal year-end. Most stakeholders look at the balance sheet to understand what the health of the business is at its FY end. A balance sheet reflects all the long term and short term assets owned by a person, company, partnership, trust at a certain date, and the amounts owed to others, or liabilities, on the same date. The balance sheet is divided into three parts: Assets, Liabilities, and Shareholder’s Equity. 

Assets are the important resources of a company. They are the resources that the company uses to operate its business and include long term and short term assets. 

Liabilities are the debts of the company. Liabilities claims that creditors have on the company’s resources.

Equity presents the net value of a company, which equals the assets that the company owns less than the debts it owes to creditors. In other words we can say that equity is comprised of the claims that investors have on the company’s resources after the debt is paid off.

Income Statement: It shows how good the company has been operating throughout the year and the outcome of the income & financial statement is within the control of the company hence it reflects how the company performed throughout the year with the company’s income and expenses. It is an important part of the operating activities in a cash flow statement. It is also knowns as a profit and loss statement which includes the net profit, gross profit, and net profit margin ratios. It results in operations of a business over a certain period of time as in one year, one quarter, one month. It includes revenues, expenses and net income 

Revenue: Revenue is a source of income that arises from the sale of goods or services and is recorded when it is earned.

Expenses: Expenses are the costs of a business incurred over a specified period of time to generate the revenues earned during that same period of time.

Net income: The Revenue which the company earns, deducts its Expenses over a specified period of time, equals its Net Income. A positive Net Income indicates a profit, while a negative Net Income indicates that a company suffered a loss.

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