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The document outlines the four main types of financial statements used in accounting and finance: Income Statement, Balance Sheet, Cash Flow Statement, and Statement of Changes in Equity. Each statement serves a specific purpose, such as measuring profitability, providing a snapshot of financial position, assessing liquidity, and detailing changes in equity. These statements are essential for understanding a company's financial performance and position over time.

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8 views1 page

Untitled Document

The document outlines the four main types of financial statements used in accounting and finance: Income Statement, Balance Sheet, Cash Flow Statement, and Statement of Changes in Equity. Each statement serves a specific purpose, such as measuring profitability, providing a snapshot of financial position, assessing liquidity, and detailing changes in equity. These statements are essential for understanding a company's financial performance and position over time.

Uploaded by

nishanmd848
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

In accounting and finance, there are four main types of financial statements that

companies prepare to report their financial performance and position. These are:

1. Income Statement (Profit and Loss Statement)

Shows a company’s revenues, expenses, and profit/loss over a specific period (monthly,
quarterly, yearly).

✅
Helps measure profitability.
Example: Sales revenue, cost of goods sold, operating expenses, net income.

2. Balance Sheet (Statement of Financial Position)

Shows the company’s assets, liabilities, and shareholders’ equity at a specific point in time.

✅
Provides a snapshot of what the company owns and owes.
Formula: Assets = Liabilities + Equity

3. Cash Flow Statement

Shows the inflow and outflow of cash during a period.

Divided into three activities:

Operating activities (cash from business operations)

Investing activities (buying/selling assets, investments)

✅
Financing activities (loans, dividends, issuing shares)
Helps assess liquidity and cash management.

4. Statement of Changes in Equity (Retained Earnings Statement)

Shows the changes in owners’ equity over a period.

✅
Includes: new share issues, dividends paid, retained earnings, and other adjustments.
Explains how profit is distributed or retained.

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