Supervisory Question:

The next step in the accounting cycle is to create financial statements for internal and external uses. Financial statements – a collection of a balance sheet, income statement and cash-slow statement – rely on information developed throughout all of the previous steps, but especially on the adjusted trial balance.

Balance sheets pool accounting records on assets, liabilities and owners' equity to shed light on a company's holdings. Income statements compare sales revenue and other income to expenses to calculate net profit. Cash-flow statements take non-cash income and expenses out of the equation to shed light on a company's cash position.