Question

Compare the information provided by the balance sheet and the income statement. When considering scenarios like a supplier planning to extend credit with terms of payment in 60 days, indicate which type of financial statement you would use and provide a detailed rationale as to why you selected that type of financial statement

Answer 1

The balance sheet shows a company’s assets, liabilities, and shareholders' equity. Total assets should equal the entire of liabilities and shareholders' equity. The balance sheet shows how a corporation uses its assets and the way those assets are financed as listed within the liabilities section. Shareholders' equity is that the difference between assets and liabilities or the cash left over for shareholders if all debts were repaid. Investors and creditors analyze the record to ascertain how a company is managing its assets and liabilities.
The income statement, often called the profit and loss statement, shows the revenues, costs, and expenses over a period which is usually a fiscal quarter or a financial year . It also provides valuable information about revenue, sales, and expenses for the company.

Accounts payable which appears in the balance sheet is seen to see any the total accounts payable. If the accounts payable is increased, we can figure that out from the Cash Flow Statement under the heading Cash Flow from Operating Activities.When a supplier is planning to extent credit period, it is favorable for a company's cash balance. It may help to view the positive amounts on the cash flow statement which can be favorable or good for a company's cash balance.