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Analysis of the relationship between four financial statements

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Who is the strongest king?

The balance sheet is the strongest King - the main table.

The income statement, the cash flow statement and the owner's equity change table are the king's guard riders.

Two, why?

Holistic analysis:

1, reflecting the purpose of returning to the four major statements.

Balance sheet: an accounting statement that reflects the financial position of an enterprise on a specific date.

Profit statement: accounting statement that reflects the operating results of an enterprise during a certain accounting period.

Cash flow statement: a statement that reflects the cash flow and cash equivalent logistics entry and outflow of an enterprise during a certain accounting period.

Statement of Changes in Owner's Equity: A statement that reflects the changes in the current period in the various components of the Owner's Equity

2. Analyze the accounting identities under the debit and credit bookkeeping method.

Accounting identities in balance sheets: Assets = Liabilities + owners' equity

Accounting identity of profit statement: Profit = income - cost

The relationship between the balance sheet and the profit statement is: the input of assets in the production process of consumption, into costs; the enterprise expenditure at the same time, there must be some income, income is the corresponding income. Income minus expenses is profit. Profit is owned by the owner of the enterprise, and the realization of profit always indicates the increase of the owner's equity in the enterprise.

Combined with the balance sheet and profit statement, we can get another identity:

Assets = Liabilities + owners' equity + income - expenses

A brief account of the relationship between the 3 and four major reports

Under the limit hypothesis, there are not many other changes.

No profit statement, want to know the profits generated by the enterprise in this period: can be seen simply through the undistributed profits + the final surplus reserve changes in the initial period;

There is no cash flow statement, we want to know the changes of cash and cash equivalents in enterprises: it can be seen simply through the changes of the monetary capital account at the beginning and the end of the period;

There is no statement of changes in owner's equity. We want to know the changes in owner's equity of an enterprise. It can be seen simply by the changes in the initial and final stages of the paid-in capital and capital reserve.

 Detailed analysis:

1. The relationship between balance sheet and profit statement.

Balance sheet is a point of time. The balance at the end of the balance sheet can be transferred to the balance sheet by means of the amount at the beginning of the period and the amount of the borrower and the borrower in the current period. According to the rules of the "debit and credit accounting method", the balance sheet and the income statement are accounted for, and finally the net income statement is transferred to the balance sheet through the profit carry-over, so as to achieve accounting constancy. The ultimate balance of style.

If we don't use the income statement, we can actually replace all the items involved in the income statement with the undistributed profits in the owner's equity. Therefore, the profit account can be regarded as a detailed list of undistributed profits.

2. The relationship between cash flow statement and balance sheet and profit statement.

1) relationship between cash flow statement and balance sheet

According to the accounting identity of appeal, we divide assets into cash and cash equivalents assets and non-cash assets, and since the cash flow statement reflects a period of data, we can do the following analysis:

Initial cash and cash equivalents + initial non current assets = initial Liabilities + initial owners' equity

End cash and cash equivalents + end non current assets = end Liabilities + end owner equity


The net increase in cash and cash equivalents is reflected in the end of the period.

Net Increase in Cash and Cash Equivalents = Liabilities (End-to-Begin) + Owner Equity (End-to-Begin) - Non-Present Assets (End-to-Begin)

2) cash flow statement - the relationship between the main table and the balance sheet and profit statement.

According to the accounting equation: assets = Liabilities + owner's equity + income - cost, we can draw the following conclusion by assuming as follows: 1.

Net Increase in Cash and Cash Equivalents = Liabilities (End-to-Begin) + Owner's Equity (End-to-Begin) - Non-Present Assets (End-to-Begin) + Current Income-Current Expenses

In this way, the cash flow statement establishes an identity relationship with the balance sheet and the profit statement. Besides, cash flow should distinguish business activities, fund-raising activities and investment activities.

Understand:

Investment activities: divided into domestic investment and foreign investment, domestic investment (such as the purchase of long-term assets), foreign investment (such as long-term equity investment, the purchase of financial instruments, etc.)

Financing activities are divided into internal financing and external financing, internal financing (equity financing), external financing (debt financing).


At this point, according to the domestic investment, foreign investment, domestic financing, external financing, the right side of the equation will be processed and changed, then the cash flow statement can be obtained.

No matter how the cash flow statement is compiled, there is not much difference in the compilation concept.

3) cash flow statement - the relationship between the schedule and the balance sheet and profit statement.

Net profit is based on accrual basis, and cash flow is recognized on cash basis, so it needs to be converted.

Schedule is from the profit statement of the net profit, through the enumeration of items, converted into operating cash flow.

The adjustment process is as follows:

Net Profit - Net Profit of Operating Activities under Accrual System (excluding the impact of investment and financing on the income statement subjects) - Net Profit of Operating Activities under Realization of Receiving and Paying System (excluding items that affect profit but do not affect cash flow) - Cash Flow of Operating Activities under Realization of Receiving and Paying System (increasing or decreasing cash flow that affects operations) Cash flow but does not affect profit items.

The schedule adjustment process is as follows:

The net profit is adjusted to cash flow from operating activities:

Net profit
project
Add: asset impairment preparation

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