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CHAPTER 2
MEASURING AND REPORTING FINANCIAL POSITION
THE MAJOR FINANCIAL STATEMENTS – AN OVERVIEW
The major financial accounting statements aim to provide a picture of the financial posi-
tion and performance of a business. To achieve this, a business’s accounting system will
normally produce three financial
statements on a regular, recurring basis. These three
statements are concerned with answering the following questions relating to a particular
period:
■
What cash movements took place?
■
How much wealth was generated?
■
What is the accumulated wealth of the business at the end of the period and what form
does it take?
To address
each of these questions, there is a separate financial statement.
The financial
statements are:
■
the
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