Answer to Question #124556 in Accounting for muhammad hasnain

Question

Briefly explain the following concepts with examples.
a.)
Differentiate between Income Statement and Balance Sheet.What are the factors that make them Successful
b)
In its simplest form, your balance sheet can be divided into two categories: assets and liabilities. Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties. Distinguishing between Assets and Liabilities.

Answer 1

a) For example, accrued salaries to the director of a company increase liabilities and decrease profits in the Balance Sheet. At the same time, the accrued salary to the director is shown in the Income Statement as expenses of the company. When receiving money for goods from the buyer, the Balance Sheet shows the increase in money in the asset and the increase in profit in liabilities, and in the Income Statement as income of the company.

b) For example, received inventories from suppliers are displayed in the balance sheet asset, and debt to suppliers for these stocks is displayed in the balance sheet liability. That is, this operation increases the asset and passing the balance by the same amount. When you pay a debt to suppliers for inventories, the balance sheet shows: in the asset, the decrease in money and in the liability decrease in debt, that is, this operation reduces the asset and the balance in the same amount. The balance of assets and liabilities should always be the same.