What is a balance sheet and what is an income statement?
Every year, every business, including sole proprietors, is required to prepare financial statements for the previous fiscal year. The Balance Sheet and Income Statement are the most important documents.
The Balance Sheet (a financial statement for a company) contains a lot of information about the company and shows its financial position on a particular day of the year. A balance sheet clearly shows the assets that the company manages. Long-term assets (fixed assets and long-term financial investments) are shown here, as well as current assets (receivables, cash, inventories, and investments) and other operating liabilities.
The profit or loss for the financial year or interim period for which it is compiled is shown on the Income Statement. It shows all of the company’s revenues and expenses, and the result is the business outcome, which can be expressed as a Profit or Loss.