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  • Essay / Four Basic Concepts of Financial Reporting - 726

    The balance sheet would provide a general understanding of the assets available for use as well as the liabilities present and the amount of equity. This information would be important in understanding where to start in developing strategies for the future. The income statement would be essential to determine the financial position of the company during the defined period. This is essential because the strategy for future operations would be very different if the company lost money rather than making it. The cash flow statement would also help determine how well investing and financing activities align with actual cash flows. It may be necessary to review funding in this area if there is a lack of synchronization. Finally, the status of changes in ownership or equity would be important in determining methods to ensure continued support from external sources. A drastic drop in equity could be a warning sign that the company's operations need to be