Balance SheetThe balance sheet is also called a statement of financial position. The balance sheet provides a summary of the company's liabilities, assets and equity at a given point in time. The balance sheet is usually prepared at the end of a financial year and is the only statement among the three basic financial statements that applies at a particular point in a company's calendar year. The budget is usually drawn up in a systematic way. As stated earlier, it is made up of three parts and the first part of the balance sheet is the assets. Assets are listed in order of liquidity, from most liquid to least liquid. The assets are then followed by the liabilities. The difference between total assets and total liabilities gives the net worth, i.e. the net worth of a company. This conforms to the accounting equation where net worth must equal assets minus liabilities. The balance sheet can also be considered from a different dimension. Total assets on a balance sheet should equal owner's equity added to liabilities. This reflects how the assets have been financed, either through the owner's capital or through borrowing money (liabilities). Assets are usually placed in one section while liabilities and equity (equity) are placed in the other section if the balance is a two-section balance. As such, a balance sheet is used for the sole purpose of financial analysis and reporting as part of the financial statement suite. Income Statement An income statement refers to a document produced on a monthly or annual basis. Provides a report on a company's earnings showing all the income earned by the company, as well as all the expenses incurred by the company, typically......in the middle of the card......generally referred to as the book value of the company and is obtained from two sources considered main. The first source, i.e. the original source, is the funds initially invested in the company, including any additional investments made subsequently. The second source is retained earnings that the company can accumulate over time through its operations. After looking at what shareholder equity is, we will look at its different components or what it is made of. Net worth includes:1. Preference Shares: Refers to the investment made by preference shareholders. They have priority over common stockholders and accrue a dividend that takes priority over any distributions made to common stockholders. It is recorded at nominal value.2. Common shares are the investment made by shareholders. It is valued at the declared value.