Question: Financial Statement articulation
What is articulation of the financial statement means?
It describes how different financial statements link together such as:
1.
Net income reconciles to statement of retained earnings (Net income at the bottom of the income statement should equal Net income on the statement of retained earnings, presented as part of the statement of stockholders' equity.)
2.
Net income reconciles to cash flows statement (Net income at the bottom of the income statement should equal net income on the cash flows statement, as presented at the beginning of operating cash flows, under the indirect method).
3.
Current assets and liabilities reconcile to cash flows statement (Under the indirect method, operating cash flows present a series of changes in current assets and liabilities. These changes should equal changes in all current assets and liabilities presented in the balance sheet.)
4.
Stockholders' equity on the balance sheet reconciles to the stockholders' equity statement (All stockholders' equity items listed on the balance sheet should equal individual stockholder equity balances listed in the statement of stockholders' equity.)
5.
Cash on the balance sheet reconciles to the cash flows statement (Cash presented as cash and cash equivalents on the balance sheet, should equal cash presented on the statement of cash flows.)