Final answer:
A bank's balance sheet is an accounting tool that lists the assets and liabilities of a bank. The income statement measures the results of operations during a period, while the statement of retained earnings reconciles changes in the retained earnings account. The balance sheet shows the financial condition of the bank, and the statement of cash flows reports the cash provided and used by the bank.
Step-by-step explanation:
A bank's balance sheet is an accounting tool that lists the assets and liabilities of a bank. An asset is something of value that the bank owns, such as cash held in its vaults or loans made to customers. A liability is something that the bank owes, such as deposits from customers. The net worth of a bank is calculated by subtracting its liabilities from its assets. The balance sheet reflects the financial condition of the bank at a specific point in time.
The four statements mentioned in the question are different financial statements used in accounting:
- The income statement measures the results of operations during a specific period of time, showing the revenues and expenses of the bank. It helps assess the profitability of the bank.
- The statement of retained earnings reconciles the changes in the retained earnings account from the beginning to the end of a period, which represents the amount of profit the bank has retained and not distributed to shareholders as dividends.
- The balance sheet shows the financial condition of the bank at a specific point in time, listing its assets, liabilities, and net worth.
- The statement of cash flows reports the cash provided and used by the bank's operating, investing, and financing activities during a specific period. It helps analyze the cash flow situation of the bank.