What are the three main types of financial statements?

The three main types of financial statements are the income statement, balance sheet, and cash flow statement.

The income statement provides a summary of a company's revenues and expenses over a specific period, allowing stakeholders to assess its operational performance and profitability. It plays a crucial role in evaluating how much profit or loss a company generated, highlighting income-generating activities.

The balance sheet presents a snapshot of a company's financial position at a specific point in time, detailing assets, liabilities, and shareholders' equity. This statement is essential for understanding the resources a company controls, the debts it owes, and the equity stake held by shareholders.

The cash flow statement tracks the flow of cash in and out of a business over a defined period. It categorizes cash flows into operating, investing, and financing activities, providing insight into the liquidity position of the company and its ability to generate cash.

These three financial statements work together to provide a comprehensive view of a company’s financial health, performance, and cash management, making them fundamental to financial analysis and decision-making.

The other options include variations of different financial statements, but they do not encompass the primary categories recognized in financial reporting. For instance, while the statement of changes in equity and the retained earnings statement are important, they are