What do balance sheets and income statements communicate? What do statements of retained earnings communicate? What do statements of cash flows communicate? How do the primary financial statements work together? Why are they important to an organization?
What do balance sheets and income statements communicate?
Balance sheet, tells about the assets and liabilities of business. It portrays the picture of the organization on a particular date. The balance sheet highlights the financial condition of a company at a single point in time. This is important; the cash flow and income statements record performance over a period of time, while the balance sheet is a snapshot in time. Income statement discloses the performance of the organization. It tells about the profitability of the organization.
What do statements of retained earnings communicate?
Statement of Retained Earnings also known as "Statement of Owners' Equity" is one of the basic financial statements as per Generally Accepted Accounting Principles. This explains the changes in company's retained earnings over the reporting period. It breaks down changes affecting the account, such as profits or losses from operations, dividends paid, and any other items charged or credited to retained earnings. ...
This solution provides details on how to successfully complete income statements.