What Are Financial Statements?

Financial statements are written documents that describe a company’s operations and financial performance. Government authorities, accountants, businesses, and others frequently audit financial accounts to guarantee accuracy and for tax, financing, and investment purposes. The following are examples of financial statements:

  1. Balance sheet
  2. Income statement
  3. Cash flow statement
    The income statement is primarily concerned with a company’s revenues and costs over a certain time period. The statement provides a company’s profit number termed net income after costs are deducted from sales.
    The balance sheet is a picture of an organization’s assets, liabilities, and stockholders’ equity.
    The cash flow statement (CFS) assesses a company’s ability to generate cash to pay debts, cover operational expenditures, and make investments.

A financial statement is a statement that is mainly prepared to show the financial PERFORMANCE of an entity for a certain period of time, or to show the financial POSITION of an entity at a particular date. They are 4 main financial statements.

  1. The Statement of Profit or Loss and other Comprehensive Income. This shows the performance of an entity regarding whether it has made a profit or a loss, and how much

  2. The Statement of Financial POSITION. This shows the financial position of an entity at a particular date, usually the financial reporting date. It shows the balances of the entity’s assets, liabilities and equity

  3. The Statement of Changes in Equity. This shows the movements that have occurred, which affect the overall equity balances at the financial reporting date. It shows items such as issue of new shares, revaluation of assets, issuance of dividends etc

  4. The Statement of Cash Flows. This shows the movement of the business’ cash and cash equivalents during a financial period.