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Accounting All-in-One For Dummies, with Online Practice, 2nd Edition
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Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

by Joseph Kraynak
April 2018
Beginner content levelBeginner
768 pages
20h 9m
English
For Dummies
Content preview from Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

Chapter 6

Coupling the Income Statement and Balance Sheet

IN THIS CHAPTER

check Seeing connections between the income statement and balance sheet

check Fitting key pieces into the balance sheet puzzle with operating ratios

check Adding assets to the balance sheet

check Examining debt versus equity on the balance sheet

Every time you record a sale or expense entry by using double-entry accounting, you see the connections between the income statement and balance sheet (see Book 1, Chapter 2 for more about double-entry accounting and the rules for debits and credits). A sale increases an asset or decreases a liability, and an expense decreases an asset or increases a liability. Therefore, one side of every sales and expense entry is in the income statement, and the other side is in the balance sheet. You can’t record a sale or an expense without affecting the balance sheet. The income statement and balance sheet are inseparable, but they aren’t reported that way!

To properly interpret financial statements — the income statement, the balance sheet, and the statement of cash flows — you need to understand the ...

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Publisher Resources

ISBN: 9781119453895Purchase book