Thanks That was precise. But if your net income is going to appear as cash in your assets section, what if you record a loss? How is that going to appear in your assets section?
First of all, under the Accrual method, you can have Income without cash. For example if you provide a service and send an invoice, you will already have "Income", but no cash until they pay. But under the Cash method, you record "income" when cash is received. Let's say on 12/31/2020 you have Assets: $1M, Liabilities: $600K Equity: $400K Then on 12/31/2021 (with a $100K loss), your Balance Sheet will look like this: Assets: $900K Liabilities: $600K Equity: $300K Let me know if this answers you question!
Thanks for the easy to understand info.
My pleasure. Thank you for the feedback.
Thanks
That was precise. But if your net income is going to appear as cash in your assets section, what if you record a loss? How is that going to appear in your assets section?
First of all, under the Accrual method, you can have Income without cash. For example if you provide a service and send an invoice, you will already have "Income", but no cash until they pay.
But under the Cash method, you record "income" when cash is received.
Let's say on 12/31/2020 you have
Assets: $1M,
Liabilities: $600K
Equity: $400K
Then on 12/31/2021 (with a $100K loss), your Balance Sheet will look like this:
Assets: $900K
Liabilities: $600K
Equity: $300K
Let me know if this answers you question!