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Income Statement, the Balance Sheet, and the Statement of Cash

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Discuss the relationship between the income statement, balance sheet, and statement of cash.

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Solution Summary

This solution discusses the relationship between the income statement, the balance sheet, and the statement of cash on a financial statement.

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Discuss the relationship between the income statement, balance sheet, and statement of cash.

Income statement:
Income statement is the statement showing the operating results of the organization for the particular financial period.ie. Income statement shows the income earned or loss incurred for the particular financial period.

Balance sheet:
Balance sheet is the statement of the financial position of the company on a particular date.

Statement of cash flow:
Cash flow statement is used to know the movement of cash and the net cash flow of the company for a particular financial period. The main purpose of preparation of statement of cash flow is to find out the liquidity position of the company i.e. the ability of the company to pay the obligations out of the sources of cash.

Relationship:

The income earned by the company shown under the debit side of the income statement will be ...

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