An income statement is a financial accounting document that states the total amount of costs, income, and taxes for a given period in time. These documents are required for federal and state tax purposes and they are public record for firms that are not privately held. It is one of the best documents for assessing the financial health of a company.
The bottom line on an income statement is net income. This is the amount of money earned by a company after paying for cost of goods sold, taxes, salaries, and other expenses. An E4-2 worksheet also has other financial information such as an adjusted trial balance and a balance sheet. A balance sheet shows a breakdown of of all of a company's assets, with their worth minus any depreciation listed. The other side of the balance sheet lists all of the company's creditors, and the amount that is owed to each of them.
Also listed on the side of the balance sheet with liabilities is owner's equity. This represents the amount of money that the owners or shareholders in the company invested to get operations underway. As such, the business owes this much money to the investors of the company. The balance sheet is another excellent financial document that is used to determine the financial health of the company. Assets should always equal liabilities plus owner's equity on the balance sheet.
Before you invest money as a stockholder in a company, you should scrutinize these and all other accounting and financial documents that you can get your hands on. Shy away from companies that show a large amount of debt and small net income levels. Invest in companies that show a steady trend of increasing net income and no long-term debt, and you'll have a better chance of receiving dividends on your investment dollar.
The bottom line on an income statement is net income. This is the amount of money earned by a company after paying for cost of goods sold, taxes, salaries, and other expenses. An E4-2 worksheet also has other financial information such as an adjusted trial balance and a balance sheet. A balance sheet shows a breakdown of of all of a company's assets, with their worth minus any depreciation listed. The other side of the balance sheet lists all of the company's creditors, and the amount that is owed to each of them.
Also listed on the side of the balance sheet with liabilities is owner's equity. This represents the amount of money that the owners or shareholders in the company invested to get operations underway. As such, the business owes this much money to the investors of the company. The balance sheet is another excellent financial document that is used to determine the financial health of the company. Assets should always equal liabilities plus owner's equity on the balance sheet.
Before you invest money as a stockholder in a company, you should scrutinize these and all other accounting and financial documents that you can get your hands on. Shy away from companies that show a large amount of debt and small net income levels. Invest in companies that show a steady trend of increasing net income and no long-term debt, and you'll have a better chance of receiving dividends on your investment dollar.