Question

Of the four required financial statements, where does the Statement of Cash Flows stand in order of importance, most important, least important or somewhere in between? Give supporting arguments for your opinion.

Answer 1

1st Important - Prolit and Loss statement - This is the most important of the four as all the transactons that generate the final incom is identified from this.

2nd Important - Balance Sheet - This is the 2nd most important of the four, one can find the networth of business by using the balance sheet, Thus is second most important for the shareholders and other investors.

3rd Important - Cash Flow - This is the 3rd most important of the four, cash flow statement shows the inflow and outflow of transactions only settled in cash. Thus is not that important as profity and loss or balance sheet.

4th Important - Notes to accounst - Notes to accounts are basically a description or expansion of items already reported under profit and loss orr balance sheet. Thus is the least important