What are the three basic financial statements?

The three basic financial statements are essential tools for understanding an organization's financial performance and position. The correct answer encompasses the Balance Sheet, Income Statement, and Statement of Cash Flows.

The Balance Sheet provides a snapshot of an organization's assets, liabilities, and equity at a specific point in time, allowing stakeholders to assess the financial stability and capital structure. The Income Statement, also known as the Profit and Loss Statement, summarizes revenues and expenses over a specific period to determine the net profit or loss, reflecting the operational performance of the entity. The Statement of Cash Flows offers insight into cash inflows and outflows from operating, investing, and financing activities, helping stakeholders understand the organization's liquidity and cash management.

Together, these three financial statements provide a comprehensive view of a company's financial health, which is crucial for making informed management decisions, assessing profitability, and ensuring accountability to stakeholders.