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Income Statement and Balance Sheet Part 1 Explained in Hindi
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Link Income Statement and Balance Sheet • The link between a balance sheet and an income statement is obvious, but it's bit tricky. The more income your business earns, the more value should show up on its balance sheet. • What is Income Statement • Income statement shows how much your business has earned during a specific period of time. It illustrates a simple equation: net income or profit equals earnings minus expenditures. In other words, your company's bottom line earnings equals the amount left over, after subtracting the sum that it cost to run your business from the amounts your customers have paid you. • The top section of the income statement lists your various sources of income, such as wholesale and retail sales, or earnings from sales versus services. These numbers are summarized as gross income or gross revenue. • The bottom section of the income statement lists your various categories of expenditures, starting with cost of goods sold, or direct costs. These are the amounts that your business has spent specifically on producing the products and services it delivers. Direct costs include materials and production labor. Your gross profit is the amount left over after subtracting these direct costs from your gross revenue. Next, your income statement lists other operating expenses, or indirect costs, which are expenditures that cannot be directly broken down and attributed to production of specific products. Indirect costs include rent, utilities, and office expenses. Your net profit is the amount left over, after subtracting direct and indirect costs from gross revenue. • What is balance sheet • Balance sheet is a snapshot of your financial situation at a particular moment in time. The left side lists your assets, or everything you own. This includes cash on hand, as well as cash in the bank; accounts receivable or money owed to you for products and services you've already delivered; inventory, equipment and other tangible assets you own; and intangible assets such as copyrights. The right side of a balance sheets shows your company's liabilities or everything you owe, including unpaid balances on loans and credit cards, and it counts payable or sums you owe to vendors. • The liabilities section of the balance sheet also includes owner's equity, • Income Statement Balance Sheet Part 2: • Income Statement and Balance Sheet (P... • To know more about us visit Finenvision webiste: https://www.finenvision.com/ • For more videos visit: https://bit.ly/2l3Dz1D • CFA | Financial Modeling • Live Classes | Videos Available Globally • #IncomeStatement #BalanceSheet #Finance
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