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What are the financial statements and what does each tell you?

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Please answer this intelligently and substantive in length (200-300 words), quality in content is appreciated.

- What are financial statements?
- What does each one tell you?
- Which financial statement is more important?
- Why?

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Solution Summary

The solution gives a description of each financial statement in 2 or 3 sentences as requested. The second section gives examples of which statement is important to which type of stakeholder. Four types of stakeholders preferences are explained and why.

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Financial statements are a report on the status of on-going business results for an entity. There are three main statements: the balance sheet, the income statement and the statement of cash flows.

The balance sheet is a position statement that discloses the balances as of a point in time for all assets, liabilities and equities. It reports amounts on a cost basis (with a very few exceptions) rather than a current value basis.

The ...

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