How to create a income and balance sheet

Expert Solution

A income statement is the statement showing the income and expenses during the year. They are governed by different Acts and laws in different countries. In general a income statement is nothing but showing the net profit after deducting all tge ecpenses from the revenue earned.

On the other hand balance sheet is the statement of asset and liabilities. It contains Assets in one side they are of 2 types current and non current asset. Non current are long terms like building, plants, machinery and current asset are cash , inventories, debtors. Liabilities has 2 parts one is Equity representing the owners capital and earnings throughout the life in terms of reserves and liabilitues which is again divided into 2 parts current and non current.

At 1st we prepare income statement starting with revenue then we duduct costs from the revenue we get profit before tax after tax deduction we get Profit after tax. Such profit after deducting dividend will be transfered to balance sheet. We then prepare the balance sheet and then we transfer the balance of p&l to balance sheet and our asset must match to liabilities.

jeff jeffy answered 2 years ago

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