balance sheet versus income statement

Balance Sheet: The balance sheet provides a snapshot of a company’s financial position at a specific point in time. It lists the company’s assets, liabilities, and shareholders’ equity. This statement is based on the fundamental accounting equation: Assets = Liabilities + Shareholders' Equity. It shows what the company owns, owes, and the residual interest of the owners. The balance sheet helps investors and creditors assess the company’s liquidity, financial stability, and capital structure Income Statement: The income statement, also known as the profit and loss (P&L) statement, outlines a company’s revenues, expenses, and profits or losses over a specific period (quarterly or annually). Unlike the balance sheet, which is a snapshot, the income statement reflects the company’s financial performance over time. It shows how effectively the company generates profit through its operations and is essential for understanding the company’s profitability and operational efficiency