Jan 30, 2009 · The balance sheet is an indicator of net worth while the income statement or statement of profit and loss is an indicator of profitability. Another explanation, combined from several sources: The main item linking the Statement of Financial Position and Statement of Activities is Net Assets.

Financial statements are better understood in context of all other components of the financial statements. For example a balance sheet will communicate more information if we have the related income statement and the statement of cash flows too. A cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities over a stated period. (Notably, a balance sheet represents a single point in time, where the income statement, the statement of changes in equity, and the cash flow statement each represent activities over a stated ...