FINANCIAL STATEMENTS

FINANCIAL STATEMENTS
Financial statements (or financial reports) are formal records of the financial activities of a business, person, or other entity. Financial statements provide an overview of a business or person’s financial condition in both short and long term. All the relevant financial information of a business enterprise, presented in a structured manner and in a form easy to understand is called the financial statements. There are four basic financial statements:

1. Balance sheet: It is also referred to as statement of financial position or condition, reports on a company’s assets, liabilities, and Ownership equity as of a given point in time.
2. Income statement: It is also referred to as Profit and Loss statement (or “P&L”), 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.
3. Statement of Retained Earnings: It explains the changes in a company’s retained earnings over the reporting period.

4. Cash Flow Statement: It reports on a company’s cash flow activities, particularly its operating, investing and financing activities.