Accounting Equation

  

Assets = Liabilities + Shareholder Equity.

If an accountant was Monty Python, this would be his holy grail. The equation comprises the balance sheet, one of the three major financial statements. All the financial statements funnel into the balance sheet. While the equation sounds intimidating, it’s quite simple. Say you have a $10k car and a $6k loan for that car. You have $4k in equity (ownership). Assets ($10k) = Liabilities ($6k loan) + Shareholder Equity ($4k). Simple, right? Now if we could just find our keys.

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Finance: What is an Income Statement?51 Views

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what is an income statement I made money yeah that's an income statement and it's [Man jumping up as money rains down]

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actually not all that far off from what accountants lawyers bankers and other

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forms of humans who count beans call an income statement well cleverly named an

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income statement is a statement of income it just states how you made your [Two guys stood at a food stall]

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income your french fries smoothie stand like who would have ever thought that

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ingredients and you had to pay 2 some ones to stand there and convince people

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to drink liquefied potatoes then you had to rent space for your stand and buy

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insurance and advertise and that abnoxious mascot in the potato costume

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you had five million in revenue and three million in expenses and this [revenue of french fries smoothie stand]

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number right here that's your pre-tax or operating profit

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grand and blammo that 1.4 million is your net income or [net income figure for business]

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after-tax profit this whole thing right here is your income statement and yeah [income statement for french fries smoothie business]

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it can and does get way way more complex than this but let's start with starch

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smoothies and work our way up [man at french fry stand thinking about selling sushi shakes]

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