How is the income statement related to the balance sheet?
Income Statement is another type of a financial statement. It summarizes activities and events of one company which happened in a period of time. Usually, there are monthly, quarterly, and annual income statement. An income statement will show all revenues, all expenses, and net profits in detail.On the contrary, a balance sheet show a company financial positions such as assets and debt at that precise date. A balance sheet will show company's assets, liabilities and sharesholders equities.Assuming no asset or liability changes, one take the net profit figures from an income statement and add it to the shareholders equities portion.For financial statement analysis purposes, having either one is useless. It is essential to have both income statement and balance sheet together.--------------------Additional AnswerBalance sheet indicate what the firm owns and how these assets are financed in the form of liabilities or ownership interest. While income statement purports to show the profitability of the firm, the balance sheet declineates the firm's holdings and obligations. Together, these statements are intended to answer two questions: How much did the firm make or lose, and what is na measure ot its worth?An income statement (profit and loss statement) summarises the company's income and expenditure coming down the the profit or loss for the period. This is a statement over a certain period of time, for example a month or a year. A balance sheet summarises the assets and liabilities of the business and is a statement at one period in time
