---
title: "Essentials: P&L Statements vs Balance Sheets"
description: A balance sheet represents the financial position of the company on a specific date. It enables readers to understand the entity's financial stability, liquidity and solvency. The balance sheet is prepared on the basis of the balances transferred from the P&L account.
image: https://www.numericeight.com.au/hubfs/Numeric_Eight_May2020/Images/P%26L_Balance_Sheet_blog.jpg
---
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# Essentials: P&L Statements vs Balance Sheets
[Admin](https://www.numericeight.com.au/blog/author/admin) Mar 7, 2019 3:52:00 PM
### Contents
[Oct 18, 2022 6:26:10 PM What's the difference between bookkeeping and accounting?](https://www.numericeight.com.au/blog/whats-the-difference-between-bookkeeping-and-accounting) [Apr 22, 2023 3:33:41 PM Balancing Creativity and Finances in Architecture](https://www.numericeight.com.au/blog/balancing-creativity-and-finances-in-architecture) [Jul 6, 2020 6:21:11 PM Emerging From Lockdown: Planning For FY 20/21](https://www.numericeight.com.au/blog/emerging-from-lockdown-1)
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### **What is a Balance Sheet?**
A balance sheet represents the financial position of the company on a specific date.
It enables readers to understand the entity's financial stability, liquidity and solvency. The balance sheet is prepared on the basis of the balances transferred from the P&L account.
### **What is a Profit & Loss Statement?**
A profit & loss Statement represents profit earned or loss suffered by business for the accounting period.
The P&L Statement is a depiction of an entity’s revenue and expenses.
### **What's the difference?**
P&L statements answer a very specific question, is the company profitable?
Balance sheet reveals what companies own and owe.
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[Oct 18, 2022 6:26:10 PM What's the difference between bookkeeping and accounting?](https://www.numericeight.com.au/blog/whats-the-difference-between-bookkeeping-and-accounting) [Apr 22, 2023 3:33:41 PM Balancing Creativity and Finances in Architecture](https://www.numericeight.com.au/blog/balancing-creativity-and-finances-in-architecture) [Jul 6, 2020 6:21:11 PM Emerging From Lockdown: Planning For FY 20/21](https://www.numericeight.com.au/blog/emerging-from-lockdown-1)
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