Hi,
In a company, I have a profit of Q3,000 in the first year.
Both the balance sheet and the income statement show the same amount, Q3,000.
In the second year, there is a profit of Q5,000.
The balance sheet shows a balance of Q8,000, while the income statement shows Q5,000.
Both are generally correct, but they don’t match because the amounts are different.
So, if I make an move to record the profit, how should it be done?
And also, how would I determine the income statement if I reset the income and expense accounts to zero, which is the closing entry?