Relation between three financial statements

Question

Accepted Answer

The three financial statements are interconnected and provide information about a company's financial performance.

The income statement shows the company's revenue, expenses, and net income or loss for a specific period.
The balance sheet shows the company's assets, liabilities, and equity at a specific point in time.
The cash flow statement shows the company's cash inflows and outflows for a specific period.
The net income from the income statement is used to calculate the retained earnings on the balance sheet.
The cash flow statement reconciles the net income from the income statement with the cash flow from operating activities.
Changes in the balance sheet accounts are reflected in the cash flow statement.
The three statements are used together to analyze a company's financial health and make investment decisions.

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