Have you heard about financial statement? It is important for financial activities for business and individual. It is a formal records of the financial activities of a business, individual, or other entities.
The financial statements give a short overall financial situation and long term for a business or individual. All financial information submitted by businesses in a structured and easily understandable form known as the financial statements.
There are four basic financial statements:
1. Balance sheet : also referred to as a statement of position or financial condition, he reported assets, liabilities, and owner equity at a given point of time.
2. Income Statement: Also referred to as Profit and Loss statement (or “P & L”), it reported revenues, expenses, and profits in any period. These include sales and other expenses incurred during the processing.
3. Statement of retained earnings: Explaining the change in retained profits at the company during the reporting period.
4. Cash flow statement : To report the company’s cash flow activities, particularly by operating activities, investment, and finance.
For large corporations, such statements are often very complex and may include notes of the financial statements and management discussion and analysis is widespread. Note that typically describe each item in the balance sheet, income statement and statement of cash flows in more detail. It is considered an important part of the financial statements.
Hope this explanation help us about financial statement. It is a simple basic explanation but it is important for our financial management.
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