Which of the following is NOT one of the three main financial statements?

• A. Income statement
• B. Balance sheet
• C. Cash flow statement
• D. Equity statement

Answer: (D)

The correct answer is 'D,' the equity statement, as it is not considered one of the three main financial statements. The three primary financial statements that companies commonly prepare and utilize are the income statement, balance sheet, and cash flow statement.

The income statement provides a summary of a company’s revenues and expenses over a specific period, resulting in net income or loss. It helps assess the company’s profitability and performance.

The balance sheet offers a snapshot of a company's assets, liabilities, and shareholders’ equity at a particular point in time. This statement is crucial for understanding the financial position and overall health of a company.

The cash flow statement complements these two by detailing the inflows and outflows of cash over a period. It categorizes cash movements into operating, investing, and financing activities, providing insights into the liquidity and cash management of the business.

While an equity statement can refer to various detailed accounts of equity changes, it is not a standalone or primary financial statement like the three mentioned above. Recognizing the main financial statements is essential for anyone studying finance, as they serve as the foundation for financial analysis and decision-making.