A balance sheet is a sheet that summarizes a company’s assets, liabilities and equity at a specified point in time. The assets are anything that a company owns, the liabilities is anything that a company owes, and the stockholder’s equity is any financial amounts invested by the shareholders. The balance sheet must follow the formula of Assets = Liabilities + Shareholders’ Equity. An income statement is also known as a company’s profit and loss statement is a company’s financial statement that shows how the revenue is turned into net income. This statement shows what the company is paying out versus what is brought in and then what is left over. A retained earnings statement, which is also known as a statement of retained earnings explains the changes in a company’s retained earnings over a reporting period. This statement shows profit and loss from operating the business, dividends paid, and any other charges or credits to the retained earnings. A statement of cash flows shows how changes in the balance sheet accounts and
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