A Visual Guide to Financial Statements: Overview for Non-Financial Managers and Investors by Thomas Ittelson

Author:Thomas Ittelson [Ittelson, Thomas]
Language: eng
Format: epub
Tags: balance sheet, income statement, profit & loss, P&L, cash flow, bookkeeping, double-entry, accounting, financial statements, investing, stock market, stocks, financial, non-financial managers, investors
Publisher: Mercury Group Press
Published: 2019-04-17T22:00:00+00:00

When a depreciation Operating Expense is entered in the Income Statement, Accumulated Depreciation increases by the same amount on the Balance Sheet.

Net Income on the Income Statement also decreases by the amount of the expense. Retained Earnings are lowered on the Balance Sheet.

Since Accumulated Depreciation is increased by the same amount that Retained Earnings lowered, Total Liabilities & Shareholder’s Equity does not change and the Balance Sheet remains in balance. Hurrah again!

Figure 17. How to Compute Ratios.

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