What is the basic difference between a Balance sheet AC and a P&L AC.
How can i know by looking at an account in SAP whether it is a BS ac or P&L ac.
What is the major difference. Because in both accounts we make postings.Then where does the difference come.
How does the system or we interpret the difference.
If you want to see whether an account is a P&L or B/S, then you can go to FS00 and check which account type a particular GL is....
And the difference between the 2 account types is that:
If a GL is a Balance Sheet account, then at the year end when you perform Balance carry forward, the balances in the Balance Sheet Account type will be carried forward as opening balance to the next fiscal year.
If a GL is a Profit and Loss Statement Type, then the balances will be made 0 for the next fiscal year. For example, take Sales Revenue A/c, which is a P&L A/c type. You book all the sales to this account in the year 2008. When you execute the year end closing procedures, the balance in this account will be carried to P&L account and the profit will be transferred to Retained Earnings account which you mention in OB53 and the opening balance will be 0 for sales account in year 2009. The balance of the retained earnings account will be carried to balance sheet as your profit.
Hope this helps you....
Profit and loss A/c is a Nominal account. It discloses net operational results (Profit or loss) for a particular period will be displayed.
Balance sheet is not an account. It is a statement. But it will be prepared with the help of Real and Personal accounts balances as on a specified date (Usually at the end of the year).
Balance accounts should be carried forward to the next fiscal year whereas Profit and Loss A/c accounts should not be carried forward to the next fiscal year. These accounts balances should be carried forward to Retained Earnings A/c. Finally the Retained Account shows net results (Profit or Loss). and the Retained Earnings A/c should be transferred to Liabilities side of the Balance Sheet.
P&L A/s shows the net results (Profit or Loss) whereas the Balance Sheet shows the Financial Position of a Business as on a particular date.
A profit and loss account reports the results of activity over a period of time, usually one year. A balance sheet reports the situation (assets, liabilities and equity) at a point in time.
The Profit and Loss Statement reports (Revenue - Expenses) Net Income (Net Profit) and it accumulates throughout one fiscal (business) year and is restarted from zero at the end of the year.
The Balance Sheet reports the value of the entity (person or business). Assets = Liabilities + Equity. Its accounts start from zero at the beginning and continue to accumulate until the business closes.
These are some differences between Balance sheet and Profit and Loss account.
Hope this will clear.