acc wk 2 assi. - Balance Sheet The first format of the...

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Balance Sheet The first format of the financial statements is the balance sheet. Balance sheet is a sheet on where the business would present all their liabilities. In other words, everything what they own and owes. It reports assets and claims to those assets at a specific point of time. There are subdivided on two categories; claims of creditors, known as liabilities and claims of owners, known as stockholders’ equity. The relationship between both categories is where the balance sheet comes from and the assets must be in balance. Income statements On this format, the business will show how successfully has been doing during a period of time. It reports their revenues and expenses, their success or failure. The net income is determined by deducting expenses from revenues. Retained earnings statement This format will indicate how much of previous income was distributed to the owners on their business in the form of dividends and how much was retained to allow the business growth future. Its shows the amount of net income retained by the company during the period of time.
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