1. The four basic financial statements include Income Statement, Balance Sheet, Statement of
Owners Equity and Cash flow Statement. The Income Statement shows what profits have been
earned or lost by an organization. The Balance Sheet covers all of the other 3 categories that
fall under the financial data of an organization may be classified. The 3 financial data include
assets, owner's equity and liabilities. It shows the financial position of the organization on a
specific date. It shows what is owned and owed by the organization as well. Statement of
owner's equity describes the movement in the capital account of the owner. Statement of Cash
flow describes where the cash is going and where the generation of the cash.
There are three primary uses of financial statements by companies including presenting
financial performance to investors for marketing, budgeting and planning for the future and
obtaining funds from creditors. Financial statements are helping in the budgeting process. While
each department has access to its own budget, understanding the performance of the entire
company and how the company reports success can help managers develop budgets in the
future.
The most important financial statement in my opinion would be the Cash flow because it allows
us to see how readily a company can meet its debt and interest payments. A company can have
a strong profit and loss, but if there is revenue generated from accounts receivable, the
company can still fail to meet its debt obligations.