Summary
Observe that Assets always equal Liabilities + Shareholders’ Equity. Understand the intuition behind the accounting equation. If you don’t quite get it, go through this exercise again.
Also notice that retained earnings increased by $30; that represents the $30 in net income that was generated during the year. Remember that the retained earnings account is the link between the balance sheet and the income statement.
Get Crash Course in Accounting and Financial Statement Analysis, Second Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
