Question

Explain why income statement can also be called a profit and loss statement. What exactly does the word balance mean in the title of the balance sheet? Why do we balance the 2 halves?

Answer 1

An income statement can also be called a profit and loss statement. An income statement determines if a business has profited from their daily operations of if a business has suffered loss. This is what an income statement is asking referred to as a Profit and loss statement.