1 . Linkage between the three statements

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Accepted Answer

The three financial statements (income statement, balance sheet, cash flow statement) are interconnected and provide a comprehensive view of a company's financial performance.

The income statement shows the company's revenues and expenses, which ultimately impact its net income.
The net income from the income statement flows into the balance sheet as retained earnings, affecting the company's equity.
The cash flow statement shows how the company's operations, investments, and financing activities impact its cash position.
Changes in the balance sheet accounts (assets, liabilities, equity) are reflected in the cash flow statement.
For example, an increase in accounts receivable on the balance sheet would be reflected as a decrease in cash flow from operations on the cash flow statement.

1 . Linkage between the three statements

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