Financial Statements
Balance Sheet
“The Balance sheet is a representation of the company’s financial health” (Fields, 2016, p.21). It
shows the financial position of an organisation within a specified period by listing its assets,
liabilities, and shareholders’ equity.
Assets. These are economic resources with the ability to provide an organization with
possible economic advantages.
Liabilities. There are the demands of creditors for funds, typically because they have
supplied the company with funds, or products and services.
Equity of shareholders. These show the sums given by the owners of funds and, in parallel,
their claims on an organization’s properties.
It is worth noting that the total assets must be equal to the sum of liability and equity (Assets
=Liability +Shareholders’ Equity).
Income Statement
“The income statement reports a firm’s success in achieving the goal of generating earnings (or
profit, or net income) during a given reporting period” (Stickney, Weil, Schipper, Francis, 2010,
p.17). It shows how the company performed during the course of its operations for a fixed
