Analyze, comprehend, and evaluate the following statements and write TRUE if the statement is correct and...

Analyze, comprehend, and evaluate the following statements and write TRUE if the statement is correct and FALSE if it is wrong.

An income statement relates to a specified period while a balance sheet shows the financial position of the entity at a particular period (T/F)

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Expert Solution

The above statement is correct: -

Income Statement: - Income Statement is made for a specified period and it indicates period wise income or loss. For instance. Income statement for the period ended 31st december 2019. It means it is a whole period profit or loss from Jan to December 2019. Income statement can be made for any period whether weekly, monthly, quarterly or annually.

If we wamt to check the quarterly profit position of the organisation, we ask our accountant to prepare quarterly Income Statement i..e Jan to March. It shows profit or loss for the period from Jan to March.

Balance Sheet: - It shows the financial position of the entity at a particular period (T/F). Say for example, we make balance sheet as on date i.e. 31st December, which means the balances of accounts on that specific date. If the balance sheet as on 31st december, 2019 is showing Bank Balance $100000. It means we had balance in bank account on 31st december was $100000. 30th december balance or 1st january balance might be different.

Therefore, Balance Sheet shows balances as on date for that exact date. We can prepare balance sheet as on date for any specific date if we need to know balances for that specific date. However, Income statement shows values for a specific period,

ekkarill92 answered 1 year ago

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