Name three types of financial statements prepared in business.

• A. Balance sheet, income statement, and budget.
• B. Balance sheet, income statement, and statement of cash flows.
• C. Income statement, equity statement, and cash flow report.
• D. Balance sheet, notes, and profit and loss.

Answer: (B)

Three main financial statements businesses prepare are the balance sheet, the income statement, and the statement of cash flows. The balance sheet shows what the company owns and owes at a specific point in time, reflecting assets, liabilities, and owners’ equity. The income statement tracks performance over a period, listing revenues and expenses to show net income or loss. The statement of cash flows explains how cash moved during the period, categorized into operating, investing, and financing activities. Together, these three provide a complete view of financial position, performance, and liquidity and are the standard trio used in formal financial reporting. Other options mix in planning documents or non-primary disclosures (like budgets or notes) or use nonstandard names (like an equity statement or cash flow report), which aren’t the three primary statements.