Question

“Businesses report information to outsiders in the form of financial statements. The 5 financial statements are balance sheet, income statement, statement of retained earnings, Statement of cash flows, and statement of changes in equity. The financial statement that and shows a company ‘operating performance at a point in time is the income statement. This is in terms of its net income or loss and is broken down by its assets and liabilities”.

The above paragraph includes many technical mistakes. Re-write it correctly.

Answer 1

The correct paragraph is as follows;

'Businesses report financial information to outsiders in the form of Fianancial Statements.The 4 financial statements are Income statement,the statement of changes in equity ,the balance sheet and the statement of cash flows.The financial statements that shows company operating performance during a given time period is the income statement.This is in terms of its net income and loss'.

The statement of changes in equity is often referred as statement of retained earnings.