-quantitative financial statements (balance sheet, income statement, statement of cash flow, statement of stockholders' equity) balance sheet shows what assets the company owns and who has claims on those assets as of a given date In financial accounting, the balance sheet and income statement are the two most important types of financial statements (others being cash flow statement, and the statement of retained earnings). A balance sheet lists assets and liabilities of the organization as of a specific moment in time, i.e. as of a certain date. Aug 14, 2015 · The Income Statement, also called Profit and Loss Statement, directly links to the cash flow statement, the balance sheet and the statement of changes in equity. The increases or decreases of net assets from the profit and loss as reported in the income statement is also in the balances reported in the balance sheet for the period end.

Example of How the Balance Sheet and Income Statement Are Connected. To illustrate the connection between the balance sheet and income statement, let's assume that a company's owner's equity was $40,000 at the beginning of the year, and it was $65,000 at the end of the year. Each financial statement appears on a separate page in the annual financial report, and the threads of connection between the financial statements aren’t referred to. The following figure shows the lines of connection between income statement accounts and balance sheet accounts. Balance sheet account changes are the basic building blocks for preparing a statement of cash flows. These changes in assets, liabilities, and owners’ equity accounts are the amounts reported in the statement of cash flows, or the changes are used to determine the cash flow amounts (as in the case of the change in retained earnings, which is separated into its net income component and its ...