Question

Explain why the income statement and the statement of cash flows are dated "For the Year Ended December 31, " whereas the balance sheet is dated "At December 31."

Answer 1

The income statement and the statement of cash flows are dated “For the Year Ended December 31” because they account for the inflow and outflow of resources during the entire year. Whereas the balance sheet is dated “At December 31” because it provides information on the assets, liabilities, and stakeholders’ equity at a specific date.

The income statement of a firm provides information of the firm’s revenues, expenses, profits or losses, over a period of time. A cash flow statement refers to the financial statement that records all the inflows and outflows of cash of a company from its business operations and investments.

The balance sheet, however, records financial information of a specific time, and this information includes the assets, liabilities, and shareholder’s equity.

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