Income Statement And Balance Sheet

While an income statement focuses on a company’s profitability over time, a balance sheet provides a snapshot of its financial position at a given moment. The balance sheet lists a company’s assets, liabilities, and shareholders’ equity, ensuring that the accounting equation (Assets = Liabilities + Equity) holds true. Together, the income statement and balance sheet give a complete picture of a company’s financial stability. The income statement shows how much money a business is making, while the balance sheet highlights what the company owns and owes. These two financial statements, along with the cash flow statement, are essential for evaluating a company’s performance and making strategic business decisions.