Chapter 5. Connections
These pages will begin our formal study of how the three major financial statements interact—how they work in concert to give a true picture of the enterprise’s financial health.
In the prior chapters, we studied separately the vocabulary and structure of the three main financial statements. What follows here is an opportunity to put the statements together as a financial reporting tool. We will see how the Income Statement relates to the Balance Sheet and vice versa and how changes to each can effect the Cash Flow Statement.
Remember the fundamental reporting function of each of the three main financial statements:
1. The Income Statement shows the manufacturing and selling actions of the enterprise that results in profit ...
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