Technical definition
A connected set of reports describing financial position, performance, cash flows and changes in equity.
How it works
The income statement calculates profit; the equity statement carries that result into equity; the balance sheet reports ending resources and claims; the cash-flow statement explains the change in cash. Notes add policies, estimates and detail.
Everyday example
Net income increases retained earnings, while ending cash in the cash-flow statement must equal cash on the balance sheet.
Common pitfall
No single statement gives a complete picture; analysis depends on their connections and disclosures.