8. Two Key Financial Reports ~ This report illustrates the fundamentals of the Balance Sheet and Income Statement (be ready to talk with your banker and investor).
The Balance Sheet and Income Statement
|
Company Name Balance Sheet Date (12/31/00) |
Company Name Income Statement For Year (2000) |
|
Assets |
Liabilities & Equity |
The Income Statement includes the following information about the company operations | ||
| This side of the balance
sheet shows all things owned by the Company (on a given day) including:
Current $ 50,000 Fixed $150,000 Intangible $ 25,000
Total $250,000 |
This side of the balance
sheet shows who has a claim to the assets.
Liabilities: Includes ALL DEBT Current $ 25,000 Long term $150,000 Sub Total $175,000
Total $250,000 |
Sales
= $1,000,000
less COGS = $ 480,000 = Gross Profit $ 520,000 less G & A = $ 465,000 = Net Profit $ 55,000
|
| The basic "accounting equation"
is: (Equity = Assets
minus
Liabilities)
(The Balance Sheet is a snap shot of the Company on a specific day) |
The Income Statement is prepared for a period of time such as a year. |
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