Financial statement

Financial statement is a formal record of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements, accompanied by a management discussion and analysis:

• A balance sheet or statement of financial position, reports on a company's assets, liabilities, and owners equity at a given point in time.
• An income statement—also called a profit and loss report (P&L report), statement of comprehensive income, or statement of income—reports on a company's income, expenses, and profits over a period of time. Profit & Loss account provide information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state.
• A cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities.
• A statement of changes in equity or equity statement or statement of retained earnings, reports on the changes in equity of the company during the stated period.

For large corporations, these statements may be complex and may include an extensive set of footnotes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.

Purpose of financial statements

The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are directly related to an organization's financial position.

See also

• Financial analysis
• Financial audit
• Financial management
• Financial ratio
• Financial report
• Financial services
• Financial transaction

References

Financial statement Resources
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