Part nine

A financial statement (or financial report) is a formal Record of the financial activities of a Business, person, or other entity. financial statement includes : 1.Statement of Financial Position1.Statement of Financial Position : also referred to as a balance sheet, reports on a company's assets, liabilities, and ownership equity at a given point in time. Statement of Financial Position : also referred to as a Balance sheet, reports on a company's Assets, LIABILITIES, and ownership Equity at a given Point in time.assetsliabilitiesownership equityStatement of Financial PositionAssetsLIABILITIESownership Equity

2. Statement of Comprehensive IncomeStatement of Comprehensive Income : also referred to as Profit and Loss statement (or a "P & L"), reports on a company's Income, Expenses, and profits over a period of time. A Profit & Loss statement provides information on the operation of the Enterprise. These include sale and the various expenses incurred during the processing state. 3. Statement of Changes in Equity : explains the changes of the company's equity throughout the reporting period Statement of Changes in Equity : explains the changes of the company's Equity throughout the reporting period Statement of Changes in Equity

4. Statement of Cash flows : reports on a company's Cash Flow activities, particularly its operating, investing and financing activities. Statement of Cash flows

Financial Statements Let’s prepare the Financial Statements reflecting the transactions we have recorded. 1.Income Statement 2.Statement of Owner’s Equity 3.Balance Sheet 4.Statement of Cash Flows 1.Income Statement 2.Statement of Owner’s Equity 3.Balance Sheet 4.Statement of Cash Flows P1

6 Income Statement Summary of an entity’s revenues, expenses, and net income or net loss for a specific period Revenues - Expenses Net Income: Revenues > Expenses Net Loss: Expenses > Revenues

7 Statement of Owner’s Equity Summary of changes in an entity’s owner’s equity during a specific period Beginning owner’s equity + Owner’s investments + Net income - Net loss - Owner’s withdrawals Ending owner’s equity

Net income is the difference between Revenues and Expenses. The income statement describes a company’s revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities. Income Statement P1

The net income of $2,200 increases Owner's Equity by $2,200. Statement of Owner’s Equity P1

The Balance Sheet describes a company’s financial position at a point in time. Balance Sheet P1

Statement of Cash Flows P1

Notes To The Financial Statements Notes to the financial statements are an integral part of the statements and are required by Generally Accepted Accounting Principles. Notes to financial statements sometimes referred to as footnotes, are used to provide additional information about a business's financial condition and methods used at arriving at the amounts presented in the financial statements. These notes contain important information about such things as the accounting methods used for recording and reporting transactions, any pending lawsuits or regulations that may affect the business, and other information that should be disclosed in order to properly analyze and evaluate the financial condition of the business.

The Need for Adequate Disclosure Notes to the financial statements often provide facts necessary for the proper interpretation of the statements. Income Statement Balance Sheet Statement of Cash Flows

Relationships Among Financial Statements Date at beginning of period Date at end of period Balance Sheet Time Income Statement Statement of Cash Flows

Balance Sheet Income Statement Other Information: Industry Competitors National economy Financial Reporting and Financial Statements Financial statements are just one source of financial accounting information.