Wall Street Oasis - Technical Guide | 100% Correct Answers | Verified | Latest 2024 Version

Describe the 3 financial statements and discuss the connections each has to the others? - *Balance Sheet* The balance sheet shows a company's *assets, its liabilities and shareholders' equity*. It is a snapshot of a company at one point in time. *Income Statement* The income statement outlines the company's *revenues and expenses*. It shows their *profit/loss over* a *period of time*. *B/S and I/S Connections*: 1) Interest Expense is calculated based on debt held on B/S 2) Revenue and Expense accounts at the end of a reporting period are closed (zeroed) out with the net debit (loss) or credit (profit) adjusted to the retained earnings account in the equity section of the B/S 3) Depreciation and Amortization is calculated based on property, plant, and equipment (PP&E) from the Balance Sheet. A $10 increase in depreciation expense will result in a $10 reduction in net PP&E and a $10 x (1-T) in net income.