Question: How are the three financial statements (income, statement, balance sheet, and cash flow statement) linked?

1. Only the assets are reflected in the cash flow statement, and the net income expenses correlate with the liabilities.
2. The net income goes to retained earnings, but the cash flow remains independent.
3. The gross profit goes to retained earning, and the shareholder equity total is added to the cash flow statement
4. The net income goes to the retained earning and to the cash flow statement

Answer: The correct answer of the above question is Option B:The net income goes to retained earnings, but the cash flow remains independent.