The linkage of the 3 financial statements can be described as:
● Financing activities mostly affect the balance sheet and cash from finalizing, except for
interest, which is shown on the income statement.
● Net income from the income statement flows to the balance sheet and cash flow statement.
● The sum of the last period’s closing cash balance plus this period’s cash from operations, investing, and financing is the closing cash balance on the balance sheet
● Depreciation is added back and CapEx is deducted on the cash flow statement, whichdetermines PP&E on the balance sheet
Note: Students can mention other examples as well
