How the Statements Interact with One Another The financial statements are all tied together to inform the company of its financial standing. There are several interactions within the financial statements: net income from the income statement is added to the beginning retained earnings to help identify the ending retained earnings. Once the ending retained earnings are calculated it is then added on to the balance sheet. The ending amount of cash on the balance sheet must match the ending amount of cash on the statement of cash flows. In order to get a full understanding of the financial standing of a company, a company must use the financial statements. One cannot get all the answers from one financial statement, all must be reviewed. This is why the interaction of the statements is key.
How Changing One Affects the