THE ANNUAL REPORTS AND FINANCIAL DECISIONS

                           Maria Berheci, Lecturer PhD
                      „Alexandru Ioan Cuza” University of Iaşi
                             maria_lia24@yahoo.com


ABSTRACT: Although one may say that the components of financial statements may
be considered autonomous and independent elements, the whole accounting
processing procedure ends with a set of financial statements that are closely
interconnected from the information viewpoint. Therefore, the earnings are shown in
the balance sheet, by themselves, however their stages are thoroughly described in the
income statement. If we consider a company's cash account, it interconnects the
balance sheet and the cash flow statements. The balance determines the amounts of
available cash and their changes in time, however it does not account for the causes
of these variations. The latter are actually the object of the cash flow statement. Also
regarding the company's earnings, their main manifestations may be found in the
balance sheet – accounting earnings and economic earnings – however an elaborate
description, starting with the net earnings and going to the economic earnings, is to
be found separately, as an equity capital statement. Our paper dwells on the
interdependence of the components of financial statements and on its influence on
financial decisions.

Keywords: financial statements, balance sheet, income statement, cash flow statement,
decision.

JEL Codes: M41, M48