ANALYZING RELATIONSHIPS AMONG FINANCIAL STATEMENTS ITEMS

Financial statements are the financial data reported in the accounting system in a more
meaningful manner.
The primary financial statements are:
> Balance sheet,
> Income statement,
> Statement of cash flows,
> Sitement of owners' equity,
> Statement of retained earnings
The Balance Sheet gives us information on a company's financial position. The other
Financial statements provide information relating to activities of a company ie. its profitability,
cash flow, and changes in owners' equity during a period of time.
The Balance Sheet provides a snapshot of a company's financial position by showing its
assets. liabilities, and owners' equity at a specific point in time.
The Income Statement tells us how profitable a company was over a specified period of
time. It reports a company's revenue, expense, and net income or loss during this period of time.
The Statement of Cash Flows presents information on a company's cash flows over a
specified period of time. This, it does by reflecting the company's cash inflows (receipts) and cash
outflows (payments) during a period.
The cash flows are categorized according to three groups of business activities: operating,
financing, and investing.