Traditional Culture Encyclopedia - Traditional culture - Why do the accounts on the balance sheet and the income statement not overlap, but the accumulated profits in the two tables will be the same?

Why do the accounts on the balance sheet and the income statement not overlap, but the accumulated profits in the two tables will be the same?

The fact is simple:

Accounting Equation 1: Assets = Liabilities+Owner's Equity Balance Sheet Basis

Accounting Equation 2: Income-cost, expense = basis of income statement.

The profit in Equation 2 refers to the "profit distribution-undistributed profit" account, which has been included in the owner's equity category in Equation 1

So after the two formulas are deformed, it is:

Assets = liabilities+(income-cost, expenses)+owner's equity except profit distribution-undistributed profits.

Therefore, although there are no overlapping subjects in these two tables, the part about "profit distribution-undistributed profit" overlaps in the calculation process, which is what you said, and the accumulated profit will be the same.

I hope the above can help you!