The two most useful financial statements are ____ and ____. A. federal tax returns; income and expense statements B. balance sheets; wills C. cash-flow statements; balance sheets D. wills; federal tax returns | Homework.Study.com (2024)

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The two most useful financial statements are ____ and ____. A. federal tax returns; income and expense statements B. balance sheets; wills C. cash-flow statements; balance sheets D. wills; federal tax returns | Homework.Study.com? ›

The correct answer is C. cash-flow statements; balance sheets. The cash flow statement evaluates the competency of enterprises to promote and utilize money. The balance sheet enables an exact representation of the economic circ*mstances.

Another way of looking at the question is which two statements provide the most information? In that case, the best selection is the income statement and balance sheet, since the statement of cash flows can be constructed from these two documents.

The three main types of financial statements are the balance sheet, the income statement, and the cash flow statement. These three statements together show the assets and liabilities of a business, its revenues, and costs, as well as its cash flows from operating, investing, and financing activities.

The personal cash flow statement measures your cash inflows or money you earn and your cash outflows or money you spend. This determines if you have a positive or negative net cash flow. A personal balance sheet summarizes your assets and liabilities to calculate your net worth.

A set of financial statements includes two essential statements: The balance sheet and the income statement.

Typically considered the most important of the financial statements, an income statement shows how much money a company made and spent over a specific period of time.

Balance Sheet

As such, it's the most important of the four financial statements. Balance sheets help a business determine its true net worth because they lay out the assets (what a company owns), liabilities (what a company owes), and shareholder equity/owner's equity (the difference between the two).

Also referred to as the statement of financial position, a company's balance sheet provides information on what the company is worth from a book value perspective. A company's income statement provides details on the revenue a company earns and the expenses involved in its operating activities.

The personal cash flow statement and the personal balance sheet are the two most important personal financial statements.

The income statement, balance sheet, and statement of cash flows are required financial statements. These three statements are informative tools that traders can use to analyze a company's financial strength and provide a quick picture of a company's financial health and underlying value.

Which two users of the financial statement are the most important? ›

Primary users of the financial statements are considered existing and potential investors, creditors, and lenders. Primary users obtain financial statement information and allow them to understand the overall health of the company such as its net cash flow status etc.

The income statement will be the most important if you want to evaluate a business's performance or ascertain your tax liability. The income statement (Profit and loss account) measures and reports how much profit a business has generated over time.

There are two basic personal financial statements that everyone should prepare, or have one of our financial advisors prepare, at least once each year: the cash flow statement and the balance sheet. This process is a critical first step in financial planning.

However, many small business owners say the income statement is the most important as it shows the company's ability to be profitable – or how the business is performing overall. You use your balance sheet to find out your company's net worth, which can help you make key strategic decisions.

But if the decision you need to make has to do with, for example, the amount of debt obligation your business can safely take on, you will find the cash flow statement more helpful. The cash flow statement and income statement are just two critical tools in managing your business.