SAP Business One Certification Practice Exam

Which two types of balances can be viewed in the Profit and Loss Statement?

1. The control accounts balance and the assets balance

2. The balance of the profit and loss accounts and the company’s expenses balance

3. The company's total revenue and liabilities

4. The company’s assets balance and its equity balance

The correct answer is: The balance of the profit and loss accounts and the company’s expenses balance

The Profit and Loss Statement, also known as the Income Statement, primarily reflects a company's revenues and expenses over a specific period, helping to evaluate its financial performance. The correct choice highlights two specific types of balances that are integral to this statement: the balance of the profit and loss accounts, which captures the overall income and expenditures, and the company's expenses balance, detailing all costs incurred during the period. This focus on revenue and expenses directly correlates with the primary functions of the Profit and Loss Statement. The statement summarizes the income generated from sales and the costs associated with generating that income. Thus, both components mentioned in the correct choice are essential for analyzing profitability. In contrast, the other choices refer to elements that are not typically represented within the Profit and Loss Statement context. Control accounts, assets, liabilities, and equity are primarily found in the Balance Sheet, which provides a snapshot of a company's financial position at a single point in time, rather than capturing performance over a period as the Profit and Loss Statement does. Hence, they do not align with the specific balances that this statement aims to portray.