A balance sheet is what shows assets, liabilities, and equity. It involves double entry accounting, which means that each transaction affects at least two items. There will be a debit and a credit to each transaction.
Assets = Liabilities + Equity
If you have an asset that is paid off then you wouldn’t add that to liabilities, but instead you would increase your equity on your balance sheet.
An income statement is a financial statement that summarizes the income and expenses incurred by a business over a period of time. Its purpose is to measure whether or not the business earned a profit.
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