The following are the main differences between the Profit and Loss Account (Income Statement) and the Balance Sheet (Position Statement).

i.The purpose of the Profit and Loss Account is to find out the net result of business activities, whereas the Balance Sheet is prepared to ascertain the financial position of the business.

ii.The Profit and Loss Account is prepared for a certain period, usually a year. The Balance Sheet, on the other hand, is prepared to know the financial position on a certain date' and not for a period.

iii.The Profit and Loss Account is prepared with balances of nominal accounts. But the Balance Sheet contains the balances of personal and real accounts.

iv.The Profit and Loss Account is prepared in the form of an account, whereas the Balance Sheet is prepared in the form of a statement.