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Financial statements, accounting equation

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What are the financial statements? What does each one tell you? Which financial statement is more important? Why? Explain, give details and examples.

What is the accounting equation? What does it tell you? Why does it have to balance? What happens if the equation does not balance? Explain, give details and examples.

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Financial Statement

Financial Statement plays a crucial role in the company because it provides assistance in economic decision making and financial decision making. It is defined as the statement of the company's financial information at the particular date. It also termed as the financial accounts. Financial statements present the summary of an organization's status in both the terms i.e. short run and long run. Basically, financial statements flourish the vital data about the financial status, changes in financial position and overall functioning of an enterprise to the number of potential users in doing investment decisions (Van Horne, Wachowicz & Bhaduri, 2008).There are four basic Financial Statements. They include:

? Balance Sheet: - Balance sheet tells the accurate financial position of a business at a particular date.
? Income Statement: - Income Statement is the summary of accounts that directly impact the profits and losses of any business. It presents the summary of net revenues or net ...

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