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ericlei12 ericlei12
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3 years ago
What is the connection between the income statement and the balance sheet?

▸ The income statement captures the flow of activity during the year and the balance sheet is a 'snapshot' of the company at the end of the year.

▸ The income statement shows the profit earned by the owners and the balance sheet shows the book value of the owner's equity.

▸ Net income (minus dividends) is added to retained earnings in the balance sheet.

▸ Accounting laws require that companies report both statements.

▸ The cash flow statement draws from both the income statement and the balance sheet.
Textbook 
Corporate Finance Online

Corporate Finance Online


Edition: 2nd
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emilyelizabeth2emilyelizabeth2
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3 years ago
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ericlei12 Author
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3 years ago
Just got PERFECT on my quiz
dearsophia21
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Yesterday
Good timing, thanks!
smdavis
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2 hours ago
This helped my grade so much Perfect
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