Why are the dates on financial statements important?

Question

How do the primary financial statements (income statement, balance sheet, and cash flow) tie together?

What managerial assessments can you make about a company that has a profit and a negative cash flow in the same accounting period?

Answer 1

Financial statement shows the business result in figure. And result is related with the period for comparison and evaluation. That’s why date is vital for expressing a financial result.

All the financial activities recorded in the individual accounts head, these individual account heads are classified in 4 major groups. These are asset, liability, income and expenditure. Income and expenditure figure out the profit or loss of the company. Along with the profit or loss all asset and liability accounts shows in the balance sheet. And from these asset and liabilities cash flow has been determined.

Profit and negative cash flow in a same accounting period indicates increase unrealized credit sale, higher capital expenditure, higher payment made against previous liability.