Financial Statement

There are five key financial statements

1. Income statement

2. Balance sheet

3. Statement of retained earning

4. Statement of cash flow

5. Notes to financial statement

Income Statement

The income statement provides a financial summary of the firm’s operating results during a specified period. Most common are income statements covering a 1-year period ending a specified date, ordinally 31 December or 30 June of the calender year.

Balance Sheet                                                Assets = Liabilities + Equity

The balance sheet presents a summary of the firm’s financial position at a given point in time. The statement balances the firm’s assets(what it owns) against its financing, which can be either debt (what it owns) or equity (what was provided by owners).

Statement of Retained Earnings

The statement of retained earning reconciles the net income earned during a given year, and any cash dividends paid, with the change in retained earnings between start and end of that year.

Statement of Cash Flows

The statement of cash flows is a summary of the cash flows over the period of concern. The statement providdes the insight into firms operating, investment, and financing cash flows and reconciles them with changes in its cash and marketable securities during the period.

Notes to the financial Statement

Included with published statements are expalnatory notes keyed to the relevant accounts in the statements. These notes to the financial statements provide detailed informaton on the accounting policies, procedures, calculatons, and transaction underlying entries in the financial statements.