Financial statements present themselves in several methods all of which assist in providing a recipe for utter success in any business while forming proficient interactions among managers and employees on top of thriving in networks between investors and creditors. Individual financial statements can be categorized into four basic statements which all serve their own specific purpose as well as working in cohesion with one another. These four financial statements are Income Statements, Retained Income Statement, Balance Sheet, and the Statement of Cash Flows (Laurie and Kevin Hillstrom, 2013).
The Income Statement also known as the "profit and loss statement" or "statement of revenue and expense" is separated into two parts. These two parts are known as the operating and non-operating sections of the Income Statement (Investopedia.com, 2013). The operating section deals with operation items that are important to investors as well as analysts because this section unveils information about revenues and expenses that are in direct significance of the fixed business operations. The non-operating section of the Income Statement focuses on disclosing revenue and expense information about actions that are not secured directly to a company's regular operations. The Income Statements purpose is to measure a company’s financial performance over a specific accounting period and evaluates it by giving a summary of how the business acquires its revenues and expenses through both operating and non-operating activities. The Retained Income statement is a financial statement outlining the changes in retained earnings during the same time period as the Income Statement does. This statement of retained earnings is organized in accordance with generally accepted accounting principles and resolves the beginning and ending retained incomes for the period, using data such as net income