Chapter 4, Problem 4.1APE

To determine

Financial Statement: It refers to the complete record of the financial transactions of the Company. It provides financial information to its users.

The four types of financial statements are as follows:

1. 1. Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
2. 2. Retained Earnings Statement: It is one of the financial statement, which shows the amount of the net income retained by a company at a particular point of time for reinvestment and pay its debts and obligations. It shows the amount of retained earnings that is not paid as dividends to the shareholders..
3. 3. Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets, which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.
4. 4. Statement of cash flows: This statement reports all the cash transactions that are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

To Indicate: Whether each account would flow into the income statement, statement of stockholders’ equity or balance sheet.