I am studying commerce in a college in South India. Can someone please clearly explain the difference between income statement and balance sheet? I am having a hard time understanding the basic difference between them.
The income statement shows how profitable a business was over a period of time, usually a fiscal quarter or year. The balance sheet summarizes what a company owns and owes (assets, liabilities and equity) at a specific point in time.
The income statement is a flow statement. The balance sheet is a stock statement. The income statement shows flows of revenue and costs over time. The balance sheet shows the stocks of assets, liabilities and equity at a point in time.
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