Wize University Introduction to Financial Accounting Textbook > The Year Ended Process
Preparing the Financial Statements
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Preparing the Financial Statements
Once all of the company's accounts have been adjusted, the adjusted ending balances are used to prepare the financial statements.
Income Statement
- Includes all revenues and expenses from the adjusted trial balance
- Used to determine the company's net earnings (profit)
Statement of Financial Position (Balance Sheet)
- Includes all assets, liabilities and shareholders' equity
- Used to determine the company's financial position (financial well-being)
Wize Tip
VERY IMPORTANT: To calculate the correct ending balance of Retained Earnings you have to add net income and subtract dividends declared from the previous balance.
