Question

Explain the five basic types of financial statement audit reports.

Answer 1

A) There are Five types of Financial Statements audit reports.

B) Those five types of financial statements are income statement, statement of financial position, statement of change in equity, statement of cash flow, and the Noted (disclosure) to financial statements.

1. Income Statement:

This is one of the financial statements of an entity that reports three main financial information of an entity for a specific period of time. Those information included revenues, expenses, and profit or loss for the period of time.

The income statement is sometimes called the statement of financial performance because this statement lets the users assess and measure the financial performance of an entity from period to period of the similar entity, competitors, or the entity itself.

2. statement of Financial Position :

Balance Sheet is sometimes also known as Statement of Financial Position. It shows the balance of assets, liabilities and equity at the end of the period of time.

It is different from the income statement since the balance sheet reports accounts balance at the reporting date while the incomestatement reports that the account’s transactions during the reporting period.

3. Statement of Change in Equity:

It is one of the financial statements that shows the shareholders contribution and movement in Equity and equity balances at the end of the accounting period.

Information that shows in this statements include Classification of Share capital , total share capital, retained earings, dividend payment, and other related state reserves.

4. Statement of Cash Flows:

This statement of Cash flows is one of the financial statements that show the movement of entity's cash during the period. This statement help users understand how is the cash movement in the entity.

There are three sections in this statement. They are cash flow from operations, Cash flow from investing and Cash flow from financial activities.

5. Note to Financial Statement:

Note to Financial Statement is the most important statement that most of the people forget about. This is the mandatory requirement by IFRS that entity has to disclose all information that matters to financial statements and help users to have a better understanding.