In accounting, there are two types of financial statements: The balance sheet and the income statement. The balance sheet provides a snapshot of a company’s assets, liabilities, and equity at a particular point in time. The income statement, on the other hand, shows how much revenue a company has earned and the expenses it has …
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When a customer buys something on credit, the account receivable is created. This account keeps track of how much the customer owes the business. The account receivable is a credit account, which means that it contains money that will eventually give money to the company. When the customer pays off their debt, the accounts receivable …
Accounts payable is the amount a company owes to its suppliers for goods and services. The Account Payable account is a debit because it shows how much the company owes. Accounts receivable is the amount a company’s customers owe for goods and services. The accounts receivable account is a credit because it represents the revenue …
Retained earnings are the portion of a company’s profits that are reinvested back into the business with debit or credit. This can finance new projects, product development, or other growth initiatives. Retained earnings can also be used to pay down debt or increase reserves. When calculating earnings, you will take the net income for the …
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