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Balance Sheet Items? Explain how does it take account of income and expenses reported in the income statement, if it does?
The Accounting Equation is Assets = Liabilities + Owner's Equity is a summary of the business as on specific date while the Income statement is a report for a duration. What happens there in the income statement is summariesed at in the balance sheet in the section of owners equity. At the end of the period the income statement bottom line is summriesed in the statement of changes in Equity and therefore, the statement of changes in owners equity is refelcted in the balance sheet in the Owner's Equity section.
I agree with Sir
