Final answer:
The major financial statements in the accounting cycle are the balance sheet, income statement, and statement of cash flows, each showing different aspects of a company's financial health. These statements help stakeholders make informed decisions and are essential for accountants and bookkeepers in maintaining accurate financial records.
Step-by-step explanation:
In the context of the accounting cycle, the major financial statements are the balance sheet, the income statement, and the statement of cash flows. A balance sheet provides a snapshot of a company's finances at a specific point in time, listing assets, liabilities, and equity to show the company's financial position. An income statement, on the other hand, details the company's revenues and expenses over a period of time, providing a measure of the firm's profitability. Finally, the statement of cash flows illustrates the cash inflows and outflows from the company's operations, investments, and financial activities, demonstrating how changes in the balance sheet and income affect cash and cash equivalents.
These statements are interconnected and form a cycle: the balance sheet is directly related to the statement of cash flows and the income statement. The income statement's bottom line, 'net income', adds to the equity portion of the balance sheet and is also a component of the cash from operating activities in the statement of cash flows. This comprehensive view provided by the financial statements helps various stakeholders make informed decisions regarding the entity's financial health. Banks, for example, utilize a balance sheet format to assess their financial stability, calculating their net worth by subtracting liabilities from assets, which is critical for maintaining financial capital and liquidity levels.
Accountants and bookkeepers play vital roles in ensuring the accuracy and timeliness of these statements. While the bookkeeper typically manages the day-to-day recording of financial transactions, the accountant takes on higher-level tasks such as verifying and analyzing the information to produce financial statements. States also have comptrollers, like the comptroller of public accounts mentioned, who play a key role in maintaining accounting records and assisting in the production of state financial reports.