An Annual Report On Balance Sheet And Income Statement

An Annual Report On Balance Sheet And Income Statement

Assignment– Chapter II



Supriya Karki

JWU: J02065735 Date: September 20, 14



(2–1) Define each of the following terms:



a. Annual report; balance sheet; income statement



Annual Report: An annual report is a complete report on the company's activities throughout the preceding year. Basically an annual report measures a corporation's financial health. They make prediction about future prospects by focusing on the past and present financial performance of the company.



Balance Sheet: Balance sheet is a convenient means of organizing and summarizing what a firm owns (its assets), what a firm owes (its liabilities), and the difference between the two (the firm's equity) at a given point of time. The accounting equation, also known as the balance sheet identity, is the basis of accounting system: Assets= Liability + Stockholder's Equity.



Income Statement: Income statement is mainly the report on Income. Its accounting definition is "Income= Revenue – Expenses". Income statement shows how much it has cost the bank to acquire its deposits and other funds sources and to generate revenues from the uses the bank has made of those funds. It is also known as profit and loss statement or Statement of revenue and expense.



b. Common stockholders' equity, or net worth; retained earnings



Common stockholders' equity, or Net worth: As we know that the stockholders' equity represents the owner's claims on the assets of the business. These claims arise

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