How to Answer: How is the income statement linked to the balance sheet?
Advice and answer examples written specifically for a Finance job interview.
10. How is the income statement linked to the balance sheet?
How to Answer
This is a very important question to know how to answer and practice. The question will most likely be asked. It's a quick and short answer. There is not much of an explanation has to be given. This is the type of question that can easily be overlooked and one can overthink the answer. Slow down.
Written by Bobbi Witt on June 18th, 2018
Entry Level
"That's a good question. The two financial statements are linked because net income flows into retained earnings."
Written by Bobbi Witt on June 18th, 2018
Experience
"The balance sheet reports a company's assets, liabilities, and owner's equity. Generally, the amount of the owner's equity will have changed from the previous balance sheet amount due to:
the company's net income which flows into retained earning. The owner's additional investments in the business or the owner's withdrawals of business assets."
Written by Bobbi Witt on June 18th, 2018