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    REFERENCE READING 1.4 Finance For Manager

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    Deepak Mahato
    Financial statements are formal records that quantify a company's financial performance and position. There are four main types of financial statements: 1) the balance sheet presents assets, liabilities and equity at a point in time, 2) the income statement reports profits/losses over a period, 3) the cash flow statement shows cash inflows and outflows from operating, investing and financing activities, and 4) the statement of changes in equity details movements in owners' equity from net income, share transactions, dividends and other reserves.

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    REFERENCE READING 1.4 Finance For Manager

    Uploaded by

    Deepak Mahato
    10 views3 pages
    Financial statements are formal records that quantify a company's financial performance and position. There are four main types of financial statements: 1) the balance sheet presents assets, liabilities and equity at a point in time, 2) the income statement reports profits/losses over a period, 3) the cash flow statement shows cash inflows and outflows from operating, investing and financing activities, and 4) the statement of changes in equity details movements in owners' equity from net income, share transactions, dividends and other reserves.

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    REFERENCE READING 1.4 Finance For Manager

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    Financial statements are formal records that quantify a company's financial performance and position. There are four main types of financial statements: 1) the balance sheet presents assets, liabilities and equity at a point in time, 2) the income statement reports profits/losses over a period, 3) the cash flow statement shows cash inflows and outflows from operating, investing and financing activities, and 4) the statement of changes in equity details movements in owners' equity from net income, share transactions, dividends and other reserves.

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    © All Rights Reserved
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    10 views3 pages

    REFERENCE READING 1.4 Finance For Manager

    Uploaded by

    Deepak Mahato
    Financial statements are formal records that quantify a company's financial performance and position. There are four main types of financial statements: 1) the balance sheet presents assets, liabilities and equity at a point in time, 2) the income statement reports profits/losses over a period, 3) the cash flow statement shows cash inflows and outflows from operating, investing and financing activities, and 4) the statement of changes in equity details movements in owners' equity from net income, share transactions, dividends and other reserves.

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    What are Financial Statements?

    Source: (accounting-simplified.com, 2017)

    https://accounting-simplified.com/financial/statements/types.html

    Definition

    Financial Statements represent a formal record of the financial activities of an entity.


    These are written reports that quantify the financial strength, performance and liquidity of
    a company. Financial Statements reflect the financial effects of business transactions and
    events on the entity.

    Four Types of Financial Statements

    The four main types of financial statements are:

    1. Statement of Financial Position

    Statement of Financial Position, also known as the Balance Sheet, presents the financial
    position of an entity at a given date. It is comprised of the following three elements:

     Assets: Something a business owns or controls (e.g. cash, inventory, plant and
    machinery, etc.)
     Liabilities: Something a business owes to someone (e.g. creditors, bank loans,
    etc.)
     Equity: What the business owes to its owners. This represents the amount of
    capital that remains in the business after its assets are used to pay off its
    outstanding liabilities. Equity therefore represents the difference between the
    assets and liabilities.
    2. Income Statement

    Income Statement, also known as the Profit and Loss Statement, reports the company's
    financial performance in terms of net profit or loss over a specified period. Income
    Statement is composed of the following two elements:

     Income: What the business has earned over a period (e.g. sales revenue, dividend
    income, etc.)
     Expense: The cost incurred by the business over a period (e.g. salaries and
    wages, depreciation, rental charges, etc.)
     Net profit or loss is arrived by deducting expenses from income.

    3. Cash Flow Statement

    Cash Flow Statement, presents the movement in cash and bank balances over a period.
    The movement in cash flows is classified into the following segments:

     Operating Activities: Represents the cash flow from primary activities of a


    business.
     Investing Activities: Represents cash flow from the purchase and sale of assets
    other than inventories (e.g. purchase of a factory plant)
     Financing Activities: Represents cash flow generated or spent on raising and
    repaying share capital and debt together with the payments of interest and
    dividends.

    4. Statement of Changes in Equity

    Statement of Changes in Equity, also known as the Statement of Retained Earnings,


    details the movement in owners' equity over a period. The movement in owners' equity is
    derived from the following components:

     Net Profit or loss during the period as reported in the income statement
     Share capital issued or repaid during the period
     Dividend payments
     Gains or losses recognized directly in equity (e.g. revaluation surpluses)
     Effects of a change in accounting policy or correction of accounting error

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