The following differences are observed between the Profit & Loss Account and Balance Sheet.
Profit and Loss Account
|It is an account.||It is a statement of assets and liabilities. it is not an account.|
|It is the second stage of Final Accounts. It|
is prepared before the Balance Sheet.
|It is the last stage of Final Accounts. It is prepared after the Profit & Loss Account.|
|It is prepared for a period of time. So its heading will be: Profit & Loss A/c for the year ended 31.12.2019.||It is prepared at a point of time. So its heading will be: Balance Sheet as on 31.12.2019.|
|Its object is to ascertain true profit or loss of business.||Its object is to ascertain the true financial position of the business.|