Reading Questions

Reading Questions

What is a Balance Sheet?

Balance Sheet describes the assets controlled by the business and how those assets are financed with the funds of creditors (liabilities), with the capital of the owners, or with both.

What does it tell you about a company’s health?

According to the balance sheet, as long as the owner’s equity has increased compared to last year, this proves the company’s health.

What is an Income Statement?

The income statement indicates the results of operations over a specified period.

How does it differ from the Balance Sheet?

Unlike the balance sheet, which is a snapshot of the enterprise’s position at a point in time, the income statement indicates cumulative business results within a defined time frame.

How do you tell if the company is profitable?

According to the income statement, if the net income is positive, this proves that the company is making a profit.