Importance of Income Statement and Balance Sheet

Importance of Income Statement and Balance Sheet
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Epstein (2014) defines the income statement as a financial report that breaks down all the income and expenses over a certain period. On the other hand, the balance sheet offers an overview of a person’s assets, equity, and liabilities over a specific time (Epstein, 2014). I would include some categories in my income statement that Hasanaj and Kuqi (2019) assert are crucial such as salary/wages, rental income, household expenses, investment, transportation expenses, and utilities. Moreover, I would include the following categories in my balance sheet: cash and cash equivalents, loans and liabilities, property and equipment, and net worth.
If I were planning to purchase a car, I could use the information in my financial reports to assess my financial strengths. According to Wahlen et al. (2023), critical analysis of my net worth is fundamental in determining the amount I can afford to buy the car. In this context, I could learn if I can maintain a car payment using my budget if I evaluated my monthly expenses. Also, I could review my cash reserves and investments to decide whethe...