Ty Shea, Chief Financial Officer for Circle City Broadcasting, joined us today for this week’s “Accounting and Bookkeeping” segment. He compared a business’ financial statements to a report card, and stressed the importance of these documents when a business is seeking outside funding.
Shea broke down a balance sheet, which uses the formula “Assets = Liabilities + Owner Equity.” It is a snapshot of a certain time period of how a business is doing from an asset and liability standpoint.
This differs from an income statement, which spans a longer period of time. It is an accumulation of a business’ revenue minus expenses. Additional financial statements that may be reviewed are a statement of cash flows and a statement of owner equity.