The income statement is often referred to as a change statement. Do you think it is correct to call it so? Why or why not? Identify the relation between the income statement and balance sheet. Keeping in mind the purpose of a balance sheet, justify if it is appropriate to refer to the income statement as a change statement.

Now, assume that the balance sheet for Winterfell Inc. reported the owner's equity as $40,000 as of December 2016 and $65,000 as of December 2017. The owner did not make any additional investment, neither did he withdraw any assets. What could be the possible reason for the change in the owner's equity? Do you think the owner's equity would change if the owner withdraws $12,000 in 2017?