Balance sheet accounts are used to record a company's assets, liabilities, and equity at a specific point in time. These accounts reflect the company's financial position at a given point in time and are used to calculate the organization's equity.
Assets are all the property and rights of a company, such as cash, inventories, machinery, among others.
Liabilities are the company's financial obligations, such as debts, loans, and accounts payable.
Equity is the difference between assets and liabilities, representing the shareholders' investment in the company.
Income statements
Income statements, also known as profit and loss accounts, are used to record the revenues, expenses and profits earned by the company during a given period. These accounts reflect the company's financial performance over a specific period of time.
Expenses are all the money that the company fan data spends, such as production costs, salaries and advertising.
The result is calculated by subtracting expenses from income, and can be positive (profit) or negative (loss).
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It is essential to understand the importance and function of both financial statements to have a complete view of a company's financial situation. Remember that the income statement shows the income and expenses in a given period, while the balance sheet reflects the financial situation at a specific point in time. Both are key tools for making informed decisions. Don't forget to analyze them together to get a broader and more accurate perspective! Good luck with your financial analysis! See you next time!