From the course: Accounting Foundations: Bookkeeping
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The financial statements
From the course: Accounting Foundations: Bookkeeping
The financial statements
- [Instructor] The trial balance contains all of our accounts, those accounts contain the results of all of our transactions. The trial balance contains all of our revenue and expense accounts, those will go on the income statement and it contains our asset accounts, our liability accounts and our owner's equity accounts. Those will go on the balance sheet. From the data in the trial balance, an income statement can be prepared. The income statement shows our revenues less our expenses. In this case, Double K had revenues of $3,200 and total expenses of $2,300 giving us a reported net income of $900. Well, as you can see, an income statement in and of itself is not hard to prepare. You simply pull the relevant accounts from the trial balance. The hard part as we now know is analyzing transactions. Deciding which accounts are involved, whether those accounts increased or decreased and by how much. The ease of preparing an income statement is your reward for the hard work put in to…
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