The Income Statement We have discussed two of the three ways in which a company normally obtains the economic resources necessary to operate its business: incurring debt and seeking new investors. A third way in which a company can obtain resources is through its own operations. The Income Statement presents the results of operations of … Continue reading Income Statement
Question: What is the link between the Balance Sheet and the Statement of Cash Flows? Answer: The Statement of Cash Flows starts with the beginning cash balance, which comes from the Balance Sheet. Also, Cash from Operations is derived using the changes in Balance Sheet accounts (such as Accounts Payable, Accounts Receivable, etc.). The net … Continue reading Balance Sheet and Cash Flows?
Question: What is the link between the Balance Sheet and the Income Statement? Answer: The main link between the two statements is that profits generated in the Income Statement get added to shareholder’s equity on the Balance Sheet as Retained Earnings. Also, debt on the Balance Sheet is used to calculate interest expense in the … Continue reading Balance Sheet and Income Statement