All 5 Preparing Financial Statements questions
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What are the main financial statements? What does the income statement show? What does the balance sheet show? In what order are the financial statements prepared?
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How do the financial statements link together?

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Answer

Profit from the income statement flows into retained earnings (equity) on the balance sheet; the cash flow statement reconciles profit to the movement in cash between two balance sheets.
Net profit -> Retained Earnings; Cash flow -> change in Cash
Real-world example A model must keep the three statements interconnected and balanced.
All 5 Preparing Financial Statements questions