THE ANNUAL REPORTS AND FINANCIAL DECISIONS

Although one may say that the components of financial statements maybe considered autonomous and independent elements, the whole accountingprocessing procedure ends with a set of financial statements that are closelyinterconnected from the information viewpoint. Therefore, the earnings are shown inthe balance sheet, by themselves, however their stages are thoroughly described in theincome statement. If we consider a company's cash account, it interconnects thebalance sheet and the cash flow statements. The balance determines the amounts ofavailable cash and their changes in time, however it does not account for the causesof these variations. The latter are actually the object of the cash flow statement. Alsoregarding the company's earnings, their main manifestations may be found in thebalance sheet – accounting earnings and economic earnings – however an elaboratedescription, starting with the net earnings and going to the economic earnings, is tobe found separately, as an equity capital statement. Our paper dwells on theinterdependence of the components of financial statements and on its influence onfinancial decisions.