Week 2: How the Financial Statements Relate to One Another

Question 1

What is the difference between the statement of cash flow and the income statement? *get rid of

Answer 1

The cash flow statement does not account for accounts payable/receivable while the income statement does

The cash statement records borrowed money while the income statement does not

Question 2

How does the income statement affect the balance sheet?

Answer 2

The income statement calculates the net income that the balance sheet needs to create retained earnings.

Question 3

How does the balance sheet affect the cash flow statement?

Answer 3

Cash is recorded on the balance sheet, so when recording beginning and end of year cash in the cash statement, you need the beginning and end of year balance sheets.