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What are the four basic financial statements? What is the primary purpose of each of the four basic financial statements? In your opinion, which financial statement is the most important? Explain why. 


The four basic financial statements are; balance sheet, income statements, retained earnings statement, income statements, and statement of cash flow. A balance sheet is prepared to show what a business owns (assets) and what it owes (liabilities). An income statement shows how successfully a business performed during a period of time which they report its revenues and expenses. A retained earnings statement indicates how much of the previous income was distributed to you and the other owners of the business in the form of dividends, it also shows how much was retained in the business to allow for future growth. A statement of cash flows shows where the business obtained cash during a period of time and how the cash was used. In my opinion I think that all of the financial statements are important to a business but if I had to pick just one I would have to pick the statement of cash flow would be the most important because it lets investors, creditors, and others know where the company's cash is going

The four basic financial statements is the balance sheet, income statement, retained earnings statement, and statement of cash flow. The balance sheet is used to present the picture of what the company owns such as assets and liabilities. The income statement is used to validate the financial health of the company by showing revenues and expenses. The retained earnings statement shows what dividends go to the shareholders. This used by determining the profit of a period of time in which is reported. The statement of cash flow provides information on the incoming and outgoing cash in a period of time. This statement gives the analysis of a company's position each period based on cash on hand.

Which statement is the most important? I feel this answer depends whom is interested. For a employee of the company I feel the income statement would be important. I say this because I would be able to use the statement to budget because of the ability to see what the company revenue is and what the company has to make payments on. As an investor standpoint, I would say the statement of cash flows is the most important because this shows me what the company is doing with the cash in a period of time. I feel the statement would give me any insight of misuse of funds.

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