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How are the income statement and the balance sheet related?

Answer:

Financial statements of company or firm includes Income and expenditure or profit and loss statement and balance sheet of financial year. Income and expenditure statement shows l income earned by them and expenditure spend by them, gross profit and net profit Balance sheet includes assets , liabilities and net worth( capital & reserves) of the company or firm. Net profit or loss of income and expenditure statement transfer to balance sheet under head of net worth.

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