Agree or Disagree? And Why? The 4 basic financial statements show the financial activity of a company. They show the impacts of various transactions by highlighting the performance, strength, and liquidity of an organization. The 4 types include the balance sheet, the income statement, the cash flow statement, and the statement of changes in equity. The reports detailed below provide numerical data that justifies or curtails decisions. Each provides key information regarding what has been done to display trend to direct what should happen. On a larger scale, this information can make or break investment decisions. The balance sheet, or statement of financial position is comprised of assets, liability, and equity. Assets equate to what is owned or controlled while liabilities are made up of what owed. Equity is the difference between the two in order represent the available capital. The income statement is a report of financial performance. This is displayed an an overview of a period of time that shows either net profit or net loss which is derived by the difference between expenses and income. Income is the earning over a period of time and an expense is an incurred cost. The cash flow statement literally shows the flow of money and bank balances throughout a specified period. It is made up of 3 components. Operating activities are the normal functions of the business. Investing activities are transactions that facilitate a growth in operating activities such as the expansion of a factory. Financing activities are money earned and spent facilitating share capital. The statement of changes in equity is a document that displays trends in equity over a period of time. It is made up the net profit or loss from the income statement, dividend payments, the issue or repayment of share capital, equity gains and losses, and the impacts of changes in accounting policy or errors.