Financial statements and reports of different organizations contain information regarding the financial condition and financial results of an organization on any date or for any period.
Components of Financial Statements and Reports:
Financial statements and reports mainly comprise components like balance sheet, income statement and statement regarding changes in financial position of an organization. Most of the times, all these components are combined with an additional statement to give a description of the financial status of the organization.
Financial statements and reports are basically the formal records of the financial activities of a business, that provide a general summary of the profitability and financial condition of the business.
Types of Financial Statements and Reports:
Basically, there are four financial statements. These are balance sheet, income statement, statement of retained earnings and statement of cash flows.
Balance sheet: It is the statement regarding financial position of a business, which includes reports on a company’s assets, liabilities and net equity on any date or for any accounting period.
Income statement: It is also termed as profit and loss statement or statement of revenue and expense. It is a financial statement that evaluates a company’s financial performance over an accounting period of time. This statement depicts the summary of the revenues and expenses of a business. This statement also depicts net profit or loss incurred by the organization over an accounting period of time.
Statement of retained earnings: This statement explains about the retained earnings of an organization. Retained earnings are the percentage of net earnings that are not paid out as dividends. It is retained by the company with an intention to reinvest in core business.
Statement of cash flows: This statement measures the financial health of the organization. Cash flow is equal to the cash receipts minus cash payments over a specific period of time. This statement basically depicts information regarding the operating, investing and financing activities of an organization.