Financial Lit Study Guide

What is Accounting? (IRCS-C)

Interpret, Record, Classify, Summarize, Communicate

5 Types of Accounts (REAL-E)

Assets, Liabilities, Equity, Revenues, Expenses

4 Financial Statements (BICS)

Balance Sheet, Income Statement,Cash Flow Statement, Statement of Owner's Equity

What Goes on a Balance Sheet?

reports a business’s assets, liabilities and equity at a specific point in time.

broken into two main sections: assets on one side and liabilities and equity on the other side.

require the two sides must balance out, meaning they should be equal to one another.

What Goes on an Income Statement?

(also called a “profit and loss statement”) lists a business’s revenues, expenses and net profit (or loss) for a specific period of time.

The end goal is to show a business’s net income for a specific reporting period.

positive = profit, negative = loss

What’s the Difference between a income statement and a balance sheet?

They both report different financial accounting information about your business. The key differences between the two reports are the Line Items Reported:

Income statement reports revenue, expenses and profit (or loss)

Balance sheet reports assets, liabilities and shareholder equity.