Anne Marie is the owner of Anne's Beauty Salon, Inc.Her accountant prepares a monthly financial statement for her business.She doesn't like to ask him questions about it.She would rather ask you as you are her friend and since she knows that you are taking an accounting course, she asks you the following questions:

1. What does net income mean on the income statement?If I have enough cash at the end of the month then I assume I made money.This concept of net income seems complicated.
2. My accountant told me that the balance sheet shows assets = liabilities plus equity.What does that mean?
3. I don't understand what the Statement of Retained Earnings is all about.What is retained earnings?

7:17 AA & learn-us-east-1-prod-fleet01-xyt C Income Statement Balance Sheet Statement of RE Anne's Beauty Salon, Inc Balance Sheet At December 31, 2015 Assets Liabilities Current Assets Current Liabilities Cash 949.5 Accounts Payable 5,000 Accounts Receivable 11,948 Unearned Revenue 200 Supplies 20,500 Total Current Liabilities 5,200 Prepaid Rent 8,40 Prepaid Insurance 6,000 Total Current Assets 47,797.5 Note Payable 15,000 Equipment 25,000 Total Liabilities 20,200 Less: Accumulated Depreciation -5,000 20,000 Stockholders' Equity Total Long-Term Assets 20,000 Common Stock 30,000 Retained Earnings 17,597.5 Total Assets 67,797.5 Total Liabilities and Stockholders' Equity 67,797.57:16 AA & learn-us-east-1-prod-fleet01-xyt C Income Statement Balance Sheet Statement of RE Anne's Beauty Salon, Inc Note, Income Statements should be monthly. This Income Statement is for trainin Income Statement For the Year 2015 Sales (Revenue) 125,000 Cost of Sales 25,000 Gross Profit 100,000 Payroll Expense 67,500 Sales, General, Administrative Expense 5,000 Rent Expense 1,400 Utilities Expense 1,670 Insurance Expense 500 Depreciation Expense 2,500 Total Operating Expense 78,570 Total Operating Income 21,430 Taxes 30% 5,430 Net Income 15,000 Michael LaFountain: Rounding due to taxes.7:17 AA & learn-us-east-1-prod-fleet01-xyt C Income Statement Balance Sheet Statement of RE Anne's Beauty Salon, Inc Statement of Retained Earnings For the Month Ending December 31, 2015 Retained Earnings, December 1 5,000 Add: Net Income 15.000 Subtract: Dividends -2,402.5 Retained Earnings, December 31 17,597.5