The main difference between balance sheets and income statements is what they show about a company’s finances.
A balance sheet gives a quick look at what a company owns and owes at a certain time. It’s like a snapshot of its finances. The main idea behind it is this:
Assets = Liabilities + Equity
For example, current assets could be cash or money due from customers. Long-term assets might include things like land or buildings. On the other side, current liabilities could be bills that are due soon, while long-term liabilities might be loans that take a while to pay off.
The income statement tells a different story. It sums up a company’s money received and spent over a period, like three months or a year. The main formula is:
Net Income = Revenues - Expenses
This statement shows how much money the company made and how much it spent. It includes important details like money earned from sales, the cost of goods sold, and other expenses.
To wrap it up, the balance sheet shows a company’s financial situation at one moment, while the income statement shows how well it has done over time. Knowing about both is important for understanding how healthy a company is financially.
The main difference between balance sheets and income statements is what they show about a company’s finances.
A balance sheet gives a quick look at what a company owns and owes at a certain time. It’s like a snapshot of its finances. The main idea behind it is this:
Assets = Liabilities + Equity
For example, current assets could be cash or money due from customers. Long-term assets might include things like land or buildings. On the other side, current liabilities could be bills that are due soon, while long-term liabilities might be loans that take a while to pay off.
The income statement tells a different story. It sums up a company’s money received and spent over a period, like three months or a year. The main formula is:
Net Income = Revenues - Expenses
This statement shows how much money the company made and how much it spent. It includes important details like money earned from sales, the cost of goods sold, and other expenses.
To wrap it up, the balance sheet shows a company’s financial situation at one moment, while the income statement shows how well it has done over time. Knowing about both is important for understanding how healthy a company is financially.