Student’s name Cash safe
In a financial statement, there is a category that is specific to assets. Assets are the items based on the benefit accrued by the client. Assets have an expected yield, especially in the future tense. Assets can be found under the balance sheet because they are gain in the business. They do not deteriorate but rather keep gaining value.
Liabilities are basically obligations in the financial statement. Liabilities are payable, and they must be listed in the order in which they are meant to be paid. These liabilities include taxes, wages, rent, dividends, or accounts that are payable. These liabilities can either be short term, which means that they are intended to be paid within twelve months. Long term liabilities, also referred to as non-current liabilities, are the payments that can be paid in more than a year. Liabilities are usually on the right side of the financial statement under the balance sheet.
In a financial statement, equity is the amount that has been invested in the business by the owners. Additionally, if there are any earnings that have been retained, they will be considered as equity. Moreover, equity can include any money that has been returned to the business by shareholders. This process can happen in case the assets were liquidated, especially if the debt in the business is being paid off. Equity can be found on the bottom half of the financial statement because it is a significant earning in the business.
Revenue in a financial statement is the increase observed in the assets column, and it can also be seen in the decrease of obligations or liabilities in case there is a provision of a service or products to be sent to the clients. Revenue represents the amount generated by the business. Revenues are majorly sales or income from an outside source. Revenue is usually under the income statement because it is a form of cash being gained by the business.
An expense id the reduction in the value of an asset in the financial statement, and they can be used to generate revenue. Expenses can be incurred in the process of gaining revenue in the business, and they include, administrative expenses which is the expense incurred when running the business or utilities. Expenses can appear indirectly in the balance sheet and directly in the income statement because the income statement shows the result at a designated period. In the balance sheet, the expense will keep declining due to retained earnings.