Balance Sheet ↔ Income Statement

Definition: The income statement and balance sheet are linked through Retained Earnings. Net income earned during the period increases equity, while revenue an…

Equation

Net Income → Retained Earnings; Revenue/Expenses affect Assets/Liabilities

The income statement and balance sheet are linked through Retained Earnings. Net income earned during the period increases equity, while revenue and expense transactions simultaneously change assets or liabilities.

External Links