What is the difference between balance sheet and income statement?

What is the difference between balance sheet and income statement Introduction: The Financial Snapshot Hello, everyone! When it comes to understanding a company's financial health, two essential documents come into play: the balance sheet and the income statement. While both provide crucial insights, they serve distinct purposes. Today, we'll delve into their differences, demystifying their jargon and unraveling their significance. Section 1: The Balance Sheet Let's start with the balance sheet. Think of it as a snapshot of a company's financial position at a specific moment, often the end of a fiscal year or quarter. It's a detailed record of what the company owns, owes, and the shareholders' equity. The balance sheet follows a simple equation: Assets = Liabilities + Shareholders' Equity. Assets encompass everything the company owns, from cash and inventory to property and investments. Liabilities, on the other hand, represent the company's debts and obligations. Finally, shareholders' equity reflects the company's net worth, calculated by subtracting liabilities from assets. Section 2: The Income Statement