Basic Financial Statements
The Basic Financial Statements
In studying financial statements, it is helpful to remember that they are only a tool to be used by different entities. For the purposes of this overview, the perspective is that of a manager. Think about the kinds of information managers need to have in order to make effective decisions and how that information might be used.
The balance sheet and income statement are both basic statements common to most businesses. Another group of statements are based on the concept of how funds flow through a business. Two such statements are the statement of retained earnings and the statement of cash flows.
To learn more about the uses of these financial statements, review the Ratio Analysis Overview which covers the notion of funds flow and the statement of retained earnings and the statement of cash flows.