Answer and Explanation:
The financial statements are the statements of the company that shows the financial position of the company. It involved the balance sheet, income statement, cash flow statement
The balance sheet shows the financial position, performance, profitability of the company with respect to the total assets, total liabilities and shareholder equity
Here the accounting equation applies i.e.
Total assets = Total liabilities + shareholder equity
The income statement records all the revenues and income earned and all the expense incurred. If the revenue is more than the expense so it would be net profit else net loss
The cash flow statement is a statement that records cash activities with related to cash payments and cash receipts. Here three activities are recorded i.e. operating, investing and financing
The operating activities deals with the change in working capital and purchase and sale of product and services
The investing activities record the purchase and sale of the assets
And, the financing activities record the shareholder equity with related to issuance of the stock, dividend, redemption, etc
