Accounting & General Ledger

5. Balance Sheet and Income Statement

Balance Sheet

The Balance Sheet (BalanceSheetPage) presents assets, liabilities and equity as at a chosen date. It is a point-in-time statement, so the operator selects the as-at date and the report composes the account balances by type into the three sections. Because accounts are classified by type in the Chart of Accounts, the statement can group and total them automatically.

Income Statement

The Income Statement, also called the Profit and Loss or P&L (IncomeStatementPage), reports period totals rather than a single date. It summarises revenue and expense activity over the selected period to show the result for that span of time. Where the Balance Sheet answers what the organization holds and owes at a moment, the Income Statement answers how it performed across a period.

How they relate

These two statements draw on the same ledger but select different account types and different time framing. The Balance Sheet reads asset, liability and equity accounts at a date; the Income Statement reads revenue and expense accounts over a period. A typical reporting workflow is to produce the Income Statement for the period just closed and the Balance Sheet as at the period-end date, giving a paired view of performance and position that both trace back to the posted journal entries in the General Ledger.