Explain the purpose of each of the four basic financial statements. (income statement, retained earnings statement, balance sheet, and statement of cash flows).

INCOME STATEMENT (covers a period of time) Revenues less Expenses equals Net Income (or Net Loss) RETAINED EARNINGS STATEMENT (covers a period of time) Beginning Retained Earnings plus Net Income (or less Net Loss) less Dividends equals Ending Retained Earnings BALANCE SHEET (prepared on one specific date) Assets \\( ^{\\star \\star} \\) equal Liabilities plus Stockholders' Equity* *Stock Equity includes both Capital Stock and Retained Earnings \\( { }^{\\star *} \\) Assets include the Ending Cash Balance STATEMENT OF CASH FLOWS Operating Activities (Day to day cash transactions) plus or less Investing Activities (Long Term Assets) plus or less Financing Activities (Long Term Liabilities and Equity) equals Change in Cash plus Beginning Cash Balance equals Ending Cash Balance