Balance sheet
Assets = liabilities + equity. After the credit sale, receivables rise. After collection, cash replaces the receivable.
Open concept →Date versus period
Three statements, different questions
The balance sheet reports financial position at a date. The income statement and cash-flow statement explain activity over a period. One transaction can touch them at different moments.
Income statement
The example recognizes service revenue when the service is delivered under its stated assumptions, not again when cash arrives.
Cash-flow statement
The collection produces cash flow. The original credit sale did not yet provide cash.
The statements must connect
Net income affects equity, while noncash timing differences help explain why profit and cash flow differ. Ending cash on the cash-flow statement must reconcile to cash on the balance sheet for the same reporting date.