Explore BrainMass

Financial Statements: Basic Formats, Accounting Equations

What is the basic format of the four basic financial statements: income statement, balance sheet, statement of cash flows and the statement of retained earnings? Explain the accounting equation with a table showing five accounts that belong to each part of the equation.

Solution Preview

Income Statement: Sales less expenses show profits. This also contains earnings per share data. A typical one would show:

-Cost of goods sold
=Gross profit
-Operating expense
=Operating Income
-Interest Expense
=Income before taxes
-Tax expense
=Net Income

Balance Sheet: Assets, liabilities and equity are listed. Assets and liabilities are usually separated into current and noncurrent. A typical one would show:

Accounts receivable
Total current assets
Property, plant and equipment
Less: accumulated depreciation
Total assets

Accounts payable
Income taxes payable
Total current liabilities
Notes payable
Other long term ...

Solution Summary

Your tutorial is 392 words and includes a table for the accounting equation.