Accounting is often called the language of business. Accounting is the systematic process of recording, classifying and summarizing financial information in such a way that its users can make meaningful decisions based on such financial information. The financial transactions are recorded in journal, from there, these transactions are classified in various ledgers and then finally the financial information is summarized in financial reports. The income statement is a statement of financial performance, which shows revenues and expenses for a company in a given year. It shows the net profit from business operations for a given accounting period. The balance sheet shows the assets, liabilities and equity of the business and is a snapshot of its financial condition. It shows current assets, which are used within one accounting year. Cash in hand, accounts receivable and inventory are some example of current assets. The balance sheet also lists non-current assets, which are expected to be used for more than one accounting year such as land, buildings, machinery, etc. On the liabilities side, it shows current liabilities, which the business has to meet within one accounting year such as trade payable, short term loans and non-current liabilities, which are long term liabilities such as long term debt, bonds. The balance sheet also shows equity of the business, which includes the opening capital and retained earnings of the business.