What's the difference between an Income Statement and a Balance Sheet?

Modified on Mon, 18 Jun 2018 at 12:05 PM

Companies produce a set of financial statements that reflect their business activities and profitability for each accounting period. The three main financial statements are the balance sheet, income statement, and statement of cash flows. The cash flow statement shows how well a company is managing its cash to fund its operations and any expansion efforts. In this article, we'll examine the differences between the balance sheet and the income statement.

Balance Sheet

The balance sheet shows a company’s assets, liabilities, and shareholders' equity. Total assets should equal the total of liabilities and shareholders' equity. The balance sheet shows how a company puts its assets to work and how those assets are financed as listed in the liabilities section. Shareholders' equity is the difference between assets and liabilities or the money left over for shareholders if all debts were repaid. Investors and creditors analyze the balance sheet to see how a company's management is putting its resources to work.

Sources : Investopedia

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