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The importance of the financial statements.

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Rochelle is your friend, and an aspiring entrepreneur. She is having difficulty understanding the purposes of financial statements, and how they fit together across time. Write a one-page summary to Rochelle, explaining the purposes of each of the three main financial statements (balance sheet, income statement, and statement of cash flow), and how they are linked together in time.

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This solution describes the importance of the financial statements and how they are linked together.

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Income statement reports the profit (or loss) of a business for a financial period. It starts off with sales or revenue that the business made over the year and minus all expenses incurred including taxes and interest payments. The left over is called the net income. Net income in the income statement ...

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