Paper Topic:

Financial Statements

Financial Statements

Financial statements are a summary of the business activities conducted within a specified time period . They provide the concerned stakeholders with a detailed summary of the transactions of the company . There are three major financial statements the Profit and Loss statement , the Balance sheet and the Statement of cashflows

The balance sheet is the foundation of all accounting records , and typically summarizes the assets owned by the company , the liabilities due to others and the accumulated equity of the owners , at a particular date . Naturally this has to balance

, whereby the assets of the company equal the sum of its liabilities and owners ' equity

The profit and loss statement on the other hand , reports the transactions over a specific period . This report captures the revenues from sales and the direct and indirect costs relating to those sales thus enabling the management of a company to declare profits or losses

The statement of cashflows is a summary of the movement of cash into and out of a company . It follows the general principle of balancing in accounting , whereby it shows the net changes that occurred in the cash in a given financial period

In today 's business environment one needs to understand and be able to analyze financial statements , which provide a summary of all the individual transactions recorded during a period of time . The final product of the accounting function are financial statements . They give interested users the opportunity to see what went on in a neat summary...

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