How are all financial statements connected ?

Question

Accepted Answer

Financial statements are connected through the flow of information and transactions between them.

The income statement shows the company's revenues and expenses, which directly impact the net income reported on the statement of cash flows.
The balance sheet reflects the company's financial position at a specific point in time, with assets equaling liabilities and equity, which is also reflected in the statement of cash flows.
The statement of cash flows reconciles the beginning and ending cash balances from the balance sheet with the net income from the income statement, showing how cash is generated and used by the company.
Changes in equity reported on the statement of changes in equity are also reflected in the balance sheet.
All financial statements are interconnected and provide a comprehensive view of a company's financial performance and position.

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