The purpose of the statement of comprehensive income is illustrate that entity's financial performance (profitability) in the accounting period (usually for one year), no matter when cash is received or paid. It is depend on accrual accounting and the formula is profit or loss for the period equal to income minus expenses. Hence, when we wan to invest one company this calculation method is clear shows the income situation of the company and unrealized profit or loss. But the statement of financial position has different purpose that is sum up the total assets, equity and liabilities on the last day during the period of times, and the statement of comprehensive income was prepared. The equation is Equity plus Liabilities equal Assets. This method can help us kown the total assets and which part of liability and equity will pay in the future or now. Also, i scan be shows that company’s profit and loss. In …show more content…
Different types of financial statements are not isolated with other one but they are closely such as statement of financial position and income statement as is show in the following table. They are interacted on each other between the statement of financial position and the income statement, meanwhile, they are directly relevant to the cash flow statement and statement of changes in equity. Furthermore, statement of changes in equity and cash flow statement was contained, also is important for the statement of financial position and the income statement. Firstly, statement of changes in equity illustrates that the reported in the entity's financial position as the movement in equity reserves of shareholders' equity at the beginning and the end of the time. As a result, the statement includes the changes in equity growing inform of between redemption and share capital issues, net profit or loss, that need recognized in equity. Secondly, statement of cash flow mainly linked to financial position of the cash flow, due to it analyze the part of the balance sheet which is changes in cash and cash equivalents balance, the effect of equity reserves and