Financial statements are reports that summarize all financial activities of a business during a certain time period.
The four main financial reports are the income statement, balance sheet, statement of retained earnings, and the statement of cash flows. The income statement summarizes the revenue and expenses of the business, the balance sheet outlines the assets, liabilities, and equity of the company, the statement of retained earnings shows how much of the business profits were reinvested in the business and the statement of cash flows traces the flow of cash in and out of the business.
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