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The financial statements are interrelated. (a) What

item of financial or operating data appears on both
the income statement and the statement of owner's
equity? (b) What item appears on both the balance
sheet and the statement of owner's equity? (c) What
item appears on both the balance sheet and the
statement of cash flows?

User Danbord
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1 Answer

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Final Answer:

(a) The item of financial or operating data that appears on both the income statement and the statement of owner's equity is the net income or net loss.

(b) The item that appears on both the balance sheet and the statement of owner's equity is the owner's equity itself or the owner's capital.

(c) An item that appears on both the balance sheet and the statement of cash flows is the cash and cash equivalents.

Step-by-step explanation:

(a) Net income or net loss is the key figure derived from the income statement, representing the company's profitability during a specific period. This value directly affects the owner's equity reported in the statement of owner's equity. The net income increases owner's equity if positive, while a net loss reduces it.

(b) Owner's equity or owner's capital represents the portion of the business owned by the owner(s). It is reported on both the balance sheet, under the equity section, and the statement of owner's equity, where changes in equity, such as investments, withdrawals, or profits/losses, are detailed.

(c) Cash and cash equivalents are reported on the balance sheet as a current asset, representing the company's liquid assets. In the statement of cash flows, the changes in cash and cash equivalents are detailed, reconciling the beginning and ending balances of cash and equivalents, hence appearing in both financial statements.

User Amirhosein
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