Answer to Question #32533 in Finance for sathis

Question

why is the bank and cash figures in the balance sheet different from the profit for the year shown in the profit and loss account?

Answer 1

The balance sheet,reflecting the effect of economic activities of the organization, showing the
property and financial position statically, at the balance sheet date. It is a
financial picture of organization at a particular time. In the dynamics the
organization activity characterizes the profit and loss account, for it reveals
the connection between past and present reporting periods, showing the expense
of what has been a change in the balance sheet. In this regard, the profit and
loss account is called temporary calculation, and the balance sheet - a
permanent settlement.