to remember is that assets = liabilities + equity. The balance
sheet is set up the same way—first assets, then liabilities, and finally owner’s equity.
Income Statement (Over A Period of Time)
Another kind of financial statement is the income statement, which shows how much money (called revenue) a company made over a
period of time, like over the course of a year. In addition to the total revenue, you’ll also be able to find out the costs and expenses
associated with earning that revenue. Finally, at the bottom of the
statement, you’ll see how much the company earned or lost during that period of time—called the net earnings or net losses.
Reading an income statement is pretty straightforward. At the top, you’ll see the income, or revenue, from sales. As you move down the statement, you’ll see a list of expenses, which are subtracted from the income. Be sure to look up the definition of words you don’t know, like amortization and depreciation. Cash Flow Statement
As it states, this reports shows the flow of cash in and out of the
company. It tells us whether or not the company has enough cash on hand to pay its expenses and to purchase assets. It does this
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