You are employed as an accountant for Innovative Computing. Your company is in the process of signing a large contract with an electronics components supplier. You have a friend who works for the electronics components supplier, and you are aware of the company having trouble paying bills. You ask to review the financial statements of the supplier.

1. Would you report this to your employer before the purchase?

2. What are the four basic financial statements and what do they tell you about a company?

3. What is the primary purpose of each of the four basic financial statements?

4. How are the four financial statements interrelated?

5. In your opinion, explain which financial statement you think is the most important?