This slide show expains the income statement and the balance sheet.

1. Lockease – Financial StatementsFinancial statements are prepared to help a business track its spending and revenue. A balance sheet shows the assets and equities of a business. An income statement shows the revenue, expenses and net income or loss over a period of time. A balance sheet shows information for a specific date. An income statement shows financial information over a specific period of time.

2. Lockease – Income StatementAn income statement is used to show the net income or net loss a business has over a specific fiscal period. The information for an income statement comes from the revenues and expenses of the business. The income statement below illustrates this.

3. Lockease – Balance SheetYou learned how to prepare a balance sheet in chapter 2. This same procedure is followed for all the balance sheets. In the example below, the assets and liabilities are given. If the two sides equal, then things are in balance. For further details on how to figure out Capital and figuring a net loss, see pages 139 and 140.