Question

What are the four financial statements typically produced by a company?

Answer 1

Four financial statements typically produced by a company are as follows:

Profit and Loss account : it is a statement showing all the income earned and all the expennses incurred by a company during a financial year. As a result, it shows what company have earned during the year (i.e. Net income/Net loss).

Balance sheet : It is tabular format statement which shows all the assets and liabilities that the caompany has at the year end date . Further, the statement shows the bifurcation of Assets into currenct assets, non-current assets, tangibles,intangibles, etc . On the other hand, the liability side shows the bifurcation between the shareholder's fund and outside liabilities. The outside libilities are further bifurcated in current and non-current liabilities .

Cash flow statement : the statement shows the reconciliation between the opening cash balance and the closing cash balance as showing in the closing balance sheet. It shows all the sources of cash inflows and cash outflows during a financial year. The statement is bifurcated into three parts which are Cashflow from operating activities, Cashflow from financing activities and Cashflow from Investing activities.

Statement of Changes in Equity : this statement is also a type of reconciliation between opening balance of shareholders equity and closing balance. It shows all the equity transactions during a year.