Which of the following is a difference between balance sheets and income statements?
A) Balance sheets provide a snapshot of a company's financial position at a particular time, whereas income statements show what has happened to an organization's income, expenses, and net profit over a period of time.
B) Balance sheets are also known as profit and loss statements, whereas income statements are also known as statements of financial position.
C) Balance sheets are used to track a business's liquidity, efficiency, and profitability over time compared to other businesses in its industry, whereas income statements are quantitative plans through which managers decide how to allocate available money to best accomplish company goals.
D) Balance sheets require managers to justify every expenditure every year, whereas income statements do not require any such justifications.

Question

Quizplus · Accepted Answer

Balance sheets and income statements serve different purposes. Balance sheets provide a snapshot of a company's financial position at a particular time, whereas income statements show what has happened to an organization's income, expenses, and net profit over a period of time. Balance sheets are used to track a company's liquidity, efficiency, and profitability over time compared to other businesses in its industry, while income statements are used to make decisions on how to allocate available money to accomplish company goals. The other choices are incorrect as they do not accurately describe the differences between balance sheets and income statements.

Which of the Following Is a Difference Between Balance Sheets