What is the difference between a balance sheet statement and a profit and loss statement?
A profit and loss or an income statement is used to measure how the company performed financially over a particular period of time. Whereas, a balance sheet statement shows the companies overall strength in terms of what the company has and what it owes to the outsiders. 4. What is depreciation? It is a process that spreads out the amount of an asset over its useful time. There are several types of depreciations used by the companies but the most common method is the straight line method. This method simply divides the cost by useful years of the asset. 5. When are the expenses recognized under the general accrual basis of accounting? All the expenses are recognized when they happen in this type of accounting. For instance: when a purchase is made with net 30 day terms, then that particular purchase is recorded at the time of obtaining the goods or services. You must keep in mind in some cases an office manager bookkeeper is skilled of running all the accounting functions of a company.
