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01.07.2022 - 20:24

What are the main three financial statements? How do you link them together to reflect the financial position and performance of a company?

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What are the main three financial statements? How do you link them together to reflect the financial position and performance of a company?

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Cash April 1, 2023 в 07:34

The main three financial statements are the income statement, balance sheet, and cash flow statement. The income statement shows a company's revenue and expenses over a specific period of time, such as a quarter or a year. It helps determine the company's profitability by subtracting expenses from revenue to determine net income. The balance sheet shows the company's assets, liabilities, and equity at a specific point in time. It reflects the company's financial position and shows how its assets are being financed by liabilities and equity. The cash flow statement shows the inflows and outflows of cash during a specific period of time. It helps determine a company's liquidity and ability to generate cash flow from its operations. To link these three financial statements together, the net income from the income statement is added to the equity section of the balance sheet, while the cash flow statement is used to reconcile the changes in cash balances between periods. The balance sheet is also used to provide information about the changes in the company's assets and liabilities, which impact the cash flow statement. Overall, these statements provide a comprehensive look at a company's financial health and performance.

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