Compare the purposes of the income statement the balance she

Compare the purposes of the income statement, the balance sheet, and the statement of cash flows.

Solution

Purpose of income statement:

It describes how the assets and liabilities are use in a particular accounting period. Or Is company in profit or loss is define by the income statement.

Purpose of balance sheet:

Statements of income and cash flows are filled in balance sheet. After filling the balance sheet total (Assets - liabilities) gives us net worth of company.

Purpose of statements of cash flows:

It explains the cash inflow and cash outflows and the amount of cash the company has at a specific time.