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Accounting Statements

Accounting statements (1) list a description of and amounts of property, together with ownership rights, and (2) report the effects of the operations on the owner's equity.

The first statement is known as the balance sheet (Figure 35-1). The balance sheet shows the assets, together with the rights of the creditors and the rights of the proprietor. The second statement is known as the income statement or profit and loss statement (Figure 35-2). It shows income and costs of operation, with the resulting increase or decrease in proprietorship. The balance sheet shows the financial condition of the business at a given time; the income statement covers the periods between any two balance sheets.


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