Financial statements

1.The balance sheet/ the statement of financial position:

Provides the users of the financial statement a snapshot of

the company's financial position as of a specific date in time.

The balance sheet shows the general categories of accounts:

Assets, Liabilites, and Equity.

The accounting equation: Assets = Liabilities + Owner's Equity

2.The income statement / Statement of profit and loss / Statement of operations:

Provides the users of financial statements a picture of the income

and expenses of the company over a period of time, typically the income

statement shows information for a calender year, sometimes it can be

for a non-calender year or a fiscal year basis which means any 12 months

period.

The income statement is made up of two general types of accounts:

Revenues and Expenses. Net income is computed by taking the company's

revenues and substractiong the company's exepenses for the period.

3.The statement of Cash Flows:

Provides the users of financial statements

a reconciliation of the company's beginning and ending Cash,

Any cash that comes into the business is referred to as Cash Inflows.

Any Cash that goes out of the business is referred to as Cash Outflows.

The cash Inflows and Outflows are shown separately for each of the three

business activities:

Namely, Operating activities, investing activities and Financing activities.

4.The Owner's Equity statement / Statement of financial position:

Provides the users of financial statements a reconciliation of the

company's beginning and ending equity accounts. This statement can have

different formats, depending on the type of legal entity.

When a statement of Owner's Equity is presented for a corporation,

the statement might show inceases for Net Income and Stock Issuance,

and for decreases, the statement might show Net loss, Dividends and Stock

Buy-Backs.

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