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A good financial manager looks at both the income statement and the balance sheet Every accountant knows you need an accurate balance sheet to have an accurate income statement If expenses and assets are not recorded properly or are in the wrong place both reports will be incorrect.

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For example, you can see how much debt you have just by looking at your total liabilities, but how can you tell if you can afford the debt you have?

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Alice, because she has negative net worth, as her debts are larger than her assets.

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The three financial statements are the income statement the balance sheet and the statement of cash.

The three provide a summary of earning and expenses, of cash flows, and of assets and debts.