The balance sheet complements the income statement, discussed in Chapter 1, “Working with Income Statements.” You need both reports to keep track of your company’s financial status. A balance sheet contains two primary sections:
• Assets states the balances in the company’s asset accounts on a given date.
• Liabilities and Equity states the balances in the company’s liability and its equity accounts on the same date.
These two sections must be in balance; that is, the total of the company’s assets ...