How to prepare two basic financial statements

Financial Statements

nHow to prepare two basic financial statements

 

 

The purpose of these statements is

to help users make better decisions.

lAssets : Any present economic outflow/benefit from which company will receive  future inflow/benefit.

lExample: Equipments, supplies, stock e.t.

 

 

 

 

 Balance Sheet

Equity is the residual balance.  Assets – liabilities = equity

Liabilities : Any present economic inflow or benefit for which  company will have to provide or commit economic sacrifice/benefit in future.

Example: Account payable, note payable, loan payable