Question

List and describe the key features of the 3 primary financial statements. Is the balance sheet a report over a period of time or at a specific point in time? What about the income statement?

Answer 1

3 Main primary financial statements are;

1.​​​​​Balance sheets

2.​​​​​.Income statement

3​.Cash flow statement

these statements are prepared to check the performance of a company and if any problems are identified then measures are taken to overcome it.

Features of BALANCESHEETS

• It is not an account it is a Financial statement
• Prepared on last day of every Financial year so it is a periodical statement.
• It is the statement tht is prepared at last among final account
• Balance sheet have 2sides one side belongs to Liabilities (obligations &debt) and the other side assets(economic resources)
• Both sides must be equal or tally each other.
• It is prepared to check financial position of a company hence it is a positional statement.

Features of INCOME STATEMENT

• An income statement shows a company's Revenue,Gains ,Expenses,Losses
• Operating performance can be measured over a specific period.
• Financial performance is also measured.
• It shows overall profitability of a company.
• The effectiveness of conversion of expenses into revenue xan also be measured.

Features of CASHFLOW STATEMENT

• It shows movement of cash within a particular period.
• Reveals cash position of a company
• Helps to make cashforecast or future cashflow
• Helps in assessing liquidity of a company over a specific period.

Cash planning can be done if there is surplus of cash it can be used for productive purpose if there is deficiency of cash the shortage can be overcome.

The balancesheets are report for specific point in time. It shows a company's financial position through its assets liabilities and stock holders equity balance at a point of time. Means it is prepared on the last day of every accounting period. Or else at the final moment. Balancesheets are snapshots of a company's Financial position. Or balancesheets shows what a company ows and owns at a specific moment date or time. It shows Financial conditions that can be measured only at a point in time.

Whereas Income Statement are prepared over a period of time. It deals with various expenses income losses and gains over a period of time.  ​​​​​​​Income statement is prepared to measure financial performance over a period of time.