Question

Which financial statements would include the following accounts?

1) Income Statement
2) Balance Sheet
3) Statement of Cash Flows
4) Statement of Retained Earnings

Answer 1

The Income Statement contains revenue and expense accounts; the Balance Sheet includes accounts for assets, liabilities, and equity; the Statement of Cash Flows tracks cash movement; and the Statement of Retained Earnings shows changes in retained earnings.

Step-by-step explanation:

The different financial statements serve various purposes and include distinct types of financial information:

• The Income Statement shows the company's revenues and expenses during a specific period. Here, you would typically find accounts related to sales, cost of goods sold, gross profit, operating expenses, and net income.
• The Balance Sheet provides a snapshot of the company's financial position at a specific point in time. It lists assets, liabilities, and shareholders' equity. Accounts such as cash, accounts receivable, inventory, property, plant & equipment, accounts payable, and retained earnings would appear here.
• The Statement of Cash Flows outlines the cash inflows and outflows from operating, investing, and financing activities over a period. It helps users understand how the company's cash position has changed over time.
• The Statement of Retained Earnings explains the changes in a company's retained earnings over a reporting period. It connects the income statement and balance sheet by showing how net income from the period has been used (e.g., reinvested in the business or paid out as dividends).