what catergorie does this fit in. utilities: does is fit in income statement or in statement of changes in owner equity or balance sheet. i think statement in chnges in owner equity is the answers if wrong please correct.
To determine the category in which utilities would fit, we need to understand the purpose of each financial statement.
1. Balance Sheet: This statement provides a snapshot of a company's financial position at a specific point in time, including its assets, liabilities, and owner's equity. It represents the equation: Assets = Liabilities + Owner's Equity.
2. Income Statement: Also known as the Profit and Loss statement, it shows the company's revenues, expenses, and net income or loss over a specific period. The equation for the income statement is: Revenues - Expenses = Net Income (or Net Loss).
3. Statement of Changes in Owner's Equity: This statement explains the changes in the owner's equity during a specific period. It includes contributions (investments), withdrawals (dividends), and retained earnings.
When categorizing utilities, we need to consider what type of expense it is. Utilities, such as electricity, water, or gas, are typically categorized as operating expenses because they are essential to a company's ongoing operations.
Therefore, utilities would be included in the Income Statement (or Profit and Loss statement) under the category of operating expenses. This statement represents the company's financial performance over a specific period, including all revenue and expense transactions.
So, your initial assumption is incorrect. Utilities would be found in the Income Statement rather than the Statement of Changes in Owner's Equity or Balance Sheet.