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Discuss the characteristics of each of the following financial statements: 1) Balance Sheet, 2) Income Statement,...

Discuss the characteristics of each of the following financial statements: 1) Balance Sheet, 2) Income Statement, and 3) Statement of Cash Flows.

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Expert Solution

Balance sheet :

• A Balance Sheet is only a statement and not an account

• It has no debit side or credit side

•The headings of the two sides are Assets and Liabilities

• A Balance Sheet is prepared at a particular point of time and not for a particular period.

Income statement :

•Income statement in "Cost Summary" or " Cost of Sales" method

•Revenues and costs show related to full reporting period (Continuous data)

•Ordinary and Extraordinary Results shown according to Predefined Chart of Accounts

•Include Valuation methods and opportunities of Window Dressing

Statement of cash flow :

•Overview on actual cash in-and outflows for the full period

•Not required under all GAAPS

•Categories of Cash Flows

•Instrument to check Liquidity and Financing needs

ekkarill92 answered 2 years ago
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