A Balance Sheet Statement Of A Company 's Asset, Liability, And Equity Of The Entity

900 Words 4 Pages
a. A Balance Sheet statement presents the assets, liabilities, and equity of the entity as of the reporting date. The report format is structured so that the total of all assets equals the total of all liabilities and equity. A balance sheet lays out the ending balances in a company 's asset, liability, and equity accounts as of the date stated on the report. The most common use of the balance sheet is as the basis for ratio analysis, to determine the liquidity of a business. Liquidity is essentially the ability to pay one 's debts in a timely manner. An Income statement presents the financial results of a business for a stated period of time. The income statement is an essential part of the financial statements that an organization releases. It itemizes the revenues and expenses of past that led to the current profit or loss, and indicates what may be done to improve the results. Income statement do not show when revenues are collected or when expenses are paid. It exemplifies projected profitability over the time frame covered by the plan. Ideally, income statements should be generated on a monthly basis during the first year, quarterly for the second and annually for the third. An income statement lists financial projections in the following format: “Income includes all revenue streams generated by the business. Cost of goods includes all the costs related to the sale of products in inventory. Gross profit margin is the difference between revenue and cost of goods.

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