Four Financial Statements and Their Functions

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Four Financial Statements and Their Functions The four financial statements are the balance sheet, income statement, statement of cash flow, and statement of owner's equity. All of these statements are interactive even though they each serve a unique purpose. They are intended to assess the health of a business. The income statement, statement of cash flow, and statement of owner equity, close out at the end of each year. The balance sheet amounts are carried over from year to year. Briefly, the balance sheet is comparison of assets to liabilities and equity. This statement is indicative of a company's position at a specific time. The income statement is a record of a company's operations over a given period of time. It shows a company's expenses, losses and revenues and is indicative of the company's net income during that period of time. The statement of cash flows is intended to provide information about a company's cash receipts and cash payments for operations, investments and financing during an accounting period. Finally, the statement of owner's equity is intended to show changes in owner's or shareholder's equity from one fiscal year to the next. Owner contributions and any additional capitol, such as the sale of new shares, are added to the equity, while dividend payments and owner withdrawals are subtracted. Financial statements are generally supplemented by information from management to explain anomalies in revenues that may have occurred during the course of

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