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Thesis statement: The balance sheet, the income statement, the statement of
cash flow and the statement of owners’ equity are the four financial statements that a
for-profit organization needs to compile.
(a) Financial statements are the mains source of financial information to
the government agencies, investors and stakeholders.
(b) Financial statements have notes at the ends to disclose certain information
like debt details, pensions, depreciation and inventory methods used.
The balance sheet is described as a picture of an organization’s
financial position at a point in time.
(b) The basic rule of accounting states that the assets should be equal to the
liabilities and owners’ equity.
(c) The income statement is a report of the net profit or loss of a business for a
certain period. The income statement shows how profitable a business is.
(d) The income statement helps the investors and lenders of a business know
how the business is handling money.
(a) The statement of cash flow shows how an organization moves cash
around in a given time.
(b) The statement of owners’ equity is a detailed description of how the owners’
equity has been changing over a period of time.
(a) Some of the information recorded in the statement of cash flow is gotten
from the balance sheet and the income statement.
(b) Expenses in th...
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