Different Types Of Financial Statement
by Emilia Brown Content ManagerThe financial statement reflects the clear
picture of the financial performance of a company in the last financial year
and the exact financial status of the firm by the end of the financial year.
Every type of organisation who does financial transactions prepares financial
statements every year. Preparing the financial statement is important for
reflecting the annual report of the company. It is used by lenders, creditors,
investment community, and management to measure the performance of an
organisation. The four major types of financial statements that Accounting
Assignment Help experts have discussed in this write-up below.
Forms of financial statements
All four major forms of financial
statements are as follows.
Income statement
Another name for the income statement is
gain and loss statement that shows the firm's financial condition in the form
of net profit or loss within a specific period of time. There are two major
elements included in the income statement - income and expenses. Income means
the amount that the business earns within a specific period and expensive means
the amount a business spends within a specific period.
Cash flow statement
The cash flow statement shows the movement
of the firm's cash within a period. This statement helps professionals to
understand the movement of cash in an organisation. There are three major
segments in the cash flow - operating activities, financing activities, and
investing activities.
Balance sheet
The balance sheet of an organisation is
also called the statement of financial position that deals with the financial
status of a firm at a specific date. There are three major elements in the
balance sheet - assets, liabilities, and equity. Assets are goods that are
owned by the firm such as inventory, machinery, cash etc. Liabilities means the
amount or something that a firm owes to someone else, such as - the bank loan,
creditors, etc. Equity shows the difference between the assets and liability.
It is something that the organisation owes to the owner.
Statement of retained earnings
The statement of retained earnings is also
called the statement of changes in equity. It reflects the movement in the
equity of the owner within a period of time. Below are the major components of
the statement of changes in equity.
●
Dividend payments
●
Net profit or loss at the
period reported in the income statement
●
Share capital repaid or issued
during the period
●
Profit or losses data reflected
directly in the equity
●
Effects of a transformation in
the accounting policy
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Created on Aug 28th 2020 06:00. Viewed 298 times.