Corporatefinanceinstitute com 1 The Corporate Finance Institute Accounting For more eBooks please visit

Balance Sheet
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corporatefinanceinstitute.com
59
The Corporate Finance Institute
Accounting
How to set up the balance sheet?
Balance sheets, like all financial statements, will have minor differences 
between organizations. However, there are several “buckets” and line 
items that are almost always included in common balance sheets. We 
briefly go through commonly found line items under Current Assets, 
Long-Term Assets, Current Liabilities, Long-Term Liabilities and Equity.

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corporatefinanceinstitute.com
60
The Corporate Finance Institute
Accounting
What is the income statement?
The income statement is one of three core statements both in financial 
modelling and accounting. The statement displays the company’s 
revenue, costs, gross profit, selling and administrative expenses, other 
expenses and income, taxes paid and net profit in a coherent and logical 
manner.
The statement is divided into periods that logically follow the company’s 
operations. The most common periodic division would be monthly, 
although certain companies may use quarterly division or a thirteen-
month cycle. Income statements will also often aggregate the periodic 
values into a full-year total.
Income Statement 

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corporatefinanceinstitute.com
61
The Corporate Finance Institute
Accounting
What is its use in financial modeling?
This statement is a great place to begin the financial model, as it 
requires the least amount of information from the balance sheet 
and cash flow statement. Thus, in terms of information, the income 
statement is a predecessor to the other two core statements.