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Why do two financial statements need different kinds of dates?

A balance sheet describes a business at a particular date, while an income statement describes revenue and expenses across a period. One is a position and the other is activity, so their dates help explain what their numbers mean.

3–5 min

Questions you could explore

  • Which questions require a snapshot, and which require a time interval?
  • How can the two statements connect without being interchangeable?

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Business

How a profitable business runs short of cash

A business can record a profitable sale before its customer pays. Bills may come due in the meantime, making the timing of cash a different question from whether trading earned a profit.

8–10 min

How a profitable business runs short of cash

Business8–10 minA business can record a profitable sale before its customer pays. Bills may come due in the meantime, making the timing of cash a different question from whether trading earned a profit.

Business

Why doesn’t a factory always reach its rated output?

A machine's maximum running speed does not tell you how many usable products leave a factory. Stoppages, changeovers, and rejected output can create a gap between a capacity claim and an actual day's production.

4–5 min

Why doesn’t a factory always reach its rated output?

Business4–5 minA machine's maximum running speed does not tell you how many usable products leave a factory. Stoppages, changeovers, and rejected output can create a gap between a capacity claim and an actual day's production.

Business

One transaction, two sides of the accounts

Buying equipment with cash or borrowed money affects the accounts differently. Assets must still balance against liabilities and equity, so one purchase changes more than the list of things a business owns.

3–5 min

One transaction, two sides of the accounts

Business3–5 minBuying equipment with cash or borrowed money affects the accounts differently. Assets must still balance against liabilities and equity, so one purchase changes more than the list of things a business owns.

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