Income statements are a must for accountants and business owners. It is a major financial statement showing profit and loss on the business and/or organization as a whole. An income statement will show the profitability of an organization during the specific time allotted on the income statement. Typically the income statement will show a quarterly or monthly statement. However, the income statement can also show two weeks of time to show a net income or net loss. The income statement allows the accountant and business owner to plan for the organizations near and far future. Typically an income statement will consist of revenues and gains along with the organizations expenses and losses.
A balance sheet is an important tool for the accountant and business owner to see a snap shot of the business on a given day. The balance sheet shows the ending balances of the organization and reveals the organizations assets, liabilities, and equity accounts during the date stated on the report. This report uses the following equation: Total Assets = Total Liabilities + Stockholder Equity. The importance of a balance sheet reveals the liquidity of the organization which show the ability to pay debts on a timely matter.
Marketing managers find the income statement more useful than the balance sheet because the income statement reveals the profitability of the business. Marketing managers want to present the best of an organization by using the information on the income statement. A marketing manager’s job is to lure consumers to purchase product or services. Marketing managers develop price strategies to maximize an organizations profits without upsetting the consumers. The income statement gives the marketing manager the important product pricing information to better help the consumers buying decisions for an on going process. A balance sheet does not reveal the overall product profitability since it reveals only a one day snap shot. In one day a popular product can be seen as unpopular, so the marketing manger would find the income statement more useful than the balance sheet.
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Kimberly Castro. (2014). US News and World Report. In Best Business Jobs: Marketing Manager. Retrieved from http://money.usnews.com/careers/best-jobs/marketing-manager
Boundless. (2014, July 3). Financial Statements Overview. In Uses of the Income Statement. Retrieved from https://www.boundless.com/accounting/textbooks/boundless-accounting-textbook/financial-statements-overview-3/the-income-statement-24/uses-of-the-income-statement-154-7372/