Final answer:
The primary difference between an audit of the balance sheet and an audit of the income statement is that the audit of the income statement focuses on verifying transactions and cutoffs, while the balance sheet audit verifies balances.
Step-by-step explanation:
The primary difference between an audit of the balance sheet and an audit of the income statement is that the audit of the income statement deals with the verification of transactions.
When auditors assess the balance sheet, they are concerned with verifying the existence, completeness, and valuation of balances at a specific point in time. On the other hand, the income statement audit involves examining the transactions that have occurred over a period of time to ensure they are recorded accurately and in the correct period, which is closely related to the verification of cutoffs.
An audit of the balance sheet primarily assesses static financial positions, while an audit of the income statement reviews the dynamic financial performance through revenues and expenses over the period.