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Financial statements are written documents that describe a company’s operations and financial performance. Government authorities, accountants, corporations, and others frequently audit financial statements to verify accuracy and for tax, financing, and investing purposes. The following are examples of financial statements:
Assets, liabilities, equity capital, total debt, etc. are listed on the balance sheet of a company at a given point in time. On one side of the balance sheet are assets, and on the other side are liabilities. Liabilities and assets must add up to equal assets (Assets = Liabilities + Equity)
Every quarter, six months, or one year, companies calculate their balance sheets to get a snapshot of their financial position. Assets and liabilities are the two main sections of the balance sheet.
In a profit and loss account, the result of business activities during a given accounting period is recorded (i.e. Profit or loss). Profit and loss are used to measure an organization performance.
Profit & loss accounting is commonly referred to as P&L accounting. Profit and Loss Statement or Income and Expense Statement are other names for it. In any case, the profit and loss statement shows how much money an organization’s has spent or incurred in its efforts to generate revenue, or the cost of doing business.
In a cash flow statement, you can see how much money enters and leaves your business over a given period. However, it excludes credit sales that haven’t been paid for. Raw materials and other items that have been purchased on credit but not paid for will also not be displayed. A company’s cash flow statement measures its ability to fund operating expenses and pay debt obligations.
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