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Main Financial Statements in order of importance

What are the main financial statements? In order of importance, list the statements. Why did you rank the statements in the order you did? Why does GAAP require all statements? Why is it necessary to prepare the formal Financial Statements if all the data are on the Adjusted Trial Balance?

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What are the main financial statements? In order of importance, list the statements.

Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings

Why did you rank the statements in the order you did?

Probably because it is the order in which they are presented in a formal financial statement report. It is worth noting that the Statement of Retained Earnings might not always be a separate statement. If the details of transactions in retained earnings are very simple, that statement can be combined with the balance sheet, or even the income statement. That explains why it is listed last.

Why does GAAP require all statements?

All of the statements are important but they present entirely different types of information to a ...

Solution Summary

The 497 word solution clearly explains each of the financial statements in terms of use by readers. There are also some examples for better understanding.

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