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    Nadya Dwi Fortuna
    The document discusses the importance of balance sheets and income statements for businesses. It explains that balance sheets provide a snapshot of a company's financial position by reporting assets, liabilities, and equity. Income statements report profits and losses over a specific period by showing revenues, expenses, gains, and losses. Some key reasons they are important include helping managers analyze financial health and leverage, identifying issues affecting profits, and allowing investors and creditors to assess performance and debt repayment ability. The document also outlines the main differences between balance sheets and income statements.

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    Tugas 2

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    Nadya Dwi Fortuna
    11 views2 pages
    The document discusses the importance of balance sheets and income statements for businesses. It explains that balance sheets provide a snapshot of a company's financial position by reporting assets, liabilities, and equity. Income statements report profits and losses over a specific period by showing revenues, expenses, gains, and losses. Some key reasons they are important include helping managers analyze financial health and leverage, identifying issues affecting profits, and allowing investors and creditors to assess performance and debt repayment ability. The document also outlines the main differences between balance sheets and income statements.

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    The document discusses the importance of balance sheets and income statements for businesses. It explains that balance sheets provide a snapshot of a company's financial position by reporting assets, liabilities, and equity. Income statements report profits and losses over a specific period by showing revenues, expenses, gains, and losses. Some key reasons they are important include helping managers analyze financial health and leverage, identifying issues affecting profits, and allowing investors and creditors to assess performance and debt repayment ability. The document also outlines the main differences between balance sheets and income statements.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    11 views2 pages

    Tugas 2

    Uploaded by

    Nadya Dwi Fortuna
    The document discusses the importance of balance sheets and income statements for businesses. It explains that balance sheets provide a snapshot of a company's financial position by reporting assets, liabilities, and equity. Income statements report profits and losses over a specific period by showing revenues, expenses, gains, and losses. Some key reasons they are important include helping managers analyze financial health and leverage, identifying issues affecting profits, and allowing investors and creditors to assess performance and debt repayment ability. The document also outlines the main differences between balance sheets and income statements.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    NAMA : NADYA DWI FORTUNA

    NIM : 2101622011218
    TUGAS 2 : English For Business & Accounting

    Balance Sheet & Income Statement. Are they important? And why ?

    The financial balance report is an important tool in analyzing a company's financial health, so
    it is very important for business owners and financial managers to understand and master
    balance sheet calculation techniques.
    It is important to make a profit and loss report because it can be a reference regarding the
    financial condition of the business or business being run. An income statement is a report that
    presents information on expenses, income, and profits or losses generated by a company during
    a certain period.

    Difference Between Income Statement and Balance Sheet


    The income statement and balance sheet report different financial accounting information to
    the business. The main differences between the two reports include:
    1. The income statement reports income, expenses and profit and loss, while the balance sheet
    reports assets, liabilities and shareholder equity.
    2. An income statement reports financial performance for a specific time period, often a month,
    quarter or year. The balance sheet reports financial activity for a specific date.
    3. Line items on the income statement are compared with sales figures to find the company's
    gross margin, operating income, and net income, as percentages. Line items on a balance sheet
    can be used to understand a business's liquidity. Recording financial business activities in this
    section helps track the strength of the company.

    Here are some reasons why they are important: Importance of Balance Sheets:

    • A balance sheet provides a snapshot of a company's financial position at a specific point


    in time.
    • It shows a company's assets, liabilities, and shareholder equity, which can help
    investors and creditors analyze the company's financial health and determine how well
    management is putting the company's resources to work.
    • It can help managers analyze the liquidity and financial leverage of the company.
    • It can help determine risk by listing everything a company owns and all of its debt,
    allowing a company to quickly assess whether it has borrowed too much money,
    whether the assets it owns are not liquid enough, or whether it has enough cash on hand
    to meet current demands.

    Importance of Income Statements:

    • An income statement shows whether a company is generating a profit or a loss.


    • It focuses on four key items: sales revenues, expenses, gains, and losses.
    • It can help managers identify problems reducing profits and opportunities for increasing
    profits.
    • It shows lenders whether a company is generating enough profit to service debts.
    • It can help investors and creditors analyze the company's financial performance and
    prospects.

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