The income statement and the balance sheet are essentially the same for sole traders and partnerships except for transactions that directly affect:
A) profit.
B) liabilities.
C) assets.
D) equity.

Question

Quizplus · Accepted Answer

The main difference between the income statement and balance sheet for sole traders and partnerships compared to other business structures lies in the equity section. This is because the equity in sole traders and partnerships reflects the owner's capital and drawings, and in the case of partnerships, it also includes the distribution of profits among partners, which directly affects the equity accounts.

The Income Statement and the Balance Sheet Are Essentially the Same