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Why does GAAP require certain statements? Rank importance.

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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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Solution Summary

The responses gives one sentence for each question plus a chart. This solution explains in everyday language suitable for a novice and provides a chart to visualize how the statement are connected and support the comments.

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See the attached diagram that shows the link between transactions and the financial statements....a bit of background for you...it shows the three main financial statements.

Importance:
Income statement - shows if the services/goods sold to customers exceeded what you used up (expenses) during the ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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