We have three accounting statements. A complete set of accounting statements are used to give readers an overview of the financial results and condition of a firm. The accounting statements are comprised of three basic reports, which are as follows:
- Income Statement.
- Balance Sheet.
- Cash Flow Statement.
- Income statement. It shows Shows the revenues and expenses of a business. Expressed over a period of time. Uses accounting principles such as matching and accruals to represent figures and Used to assess the profitability of the Firm.
- Balance sheet. The balance sheet displays the company’s assets, liabilities, and shareholders’ equity at a point in time. As commonly known, assets must equal liabilities plus equity. The asset section begins with cash and equivalents, which should equal the balance found at the end of the cash flow statement. The balance sheet then displays the changes in each major account from period to period. Net income from the income statement flows into the balance sheet as a change in retained earnings.
- Shows the financial position of a business
- Expressed as a “snapshot” or financial picture of the company at a specified point in time (i.e., as of December 31, 2017)
- Has three sections: assets, liabilities, and shareholders equity
- Assets = Liabilities + Shareholders Equity
- Statement of cash flows. It Shows the increases and decreases in cash. Expressed over a period of time, an accounting period. Undoes all accounting principles to show pure cash movements. Has three sections: cash from operations, cash used in investing, and cash from financing. Shows the net change in the cash balance from start to end of the period