Transaction analysis determines the changes in account balances as the events of each day take place. Financial statements provide a formal structure to communicate the resulting balances periodically to an array of interested parties. Revenues, expenses ,gains, and losses are presented on an income statement where they are combined to arrive at reported net income for the period. Total income earned and dividends paid by the company over its entire life are netted to compute the current retained earnings balance. Assets, liabilities, capital stock, and retained earnings are all displayed on a balance sheet. Changes in cash are separated into operating activities, investing activities, and financing activities and disclosed on a statement of cash flows. Notes offer pages of additional explanatory information. The amount of financial data that is readily available is impressive. The accountant for a business of any significant size faces a daunting challenge in creating financial statements: gathering, measuring, and reporting the impact of the many varied events that occur virtually every day. As an example, for 2008, Xerok Corporation disclosed revenues of over $17.6 billion and operating expenses and other costs of $17.4 billion. At the end of 2008, the Kelloz Company reported holding $897 million in inventory—which is a lot of cereal—and indicated that its operating activities that year generated a net cash inflow of nearly $1.3 billion. How can any organization possibly amass and maintain such an enormous volume of data so that financial statements can be produced with no material misstatements?