Question

list and describe the key features of 3 finance reports

Answer 1

Following are the three financial reports.

Balance sheet, income statement & cash flow statement.

Features of balance sheet:

• The balance sheet is a statement that provides information about the company from a perspective of book value.
• The balance sheet has three categories namely assets, liabilities & shareholder’s equity.
• The balance sheet provides the true picture about the company’s financial position.
• Assets = liabilities + shareholder’s equity.

Following are some of the key features of the income statement:

• The income statement is the summary of revenues & expenses of a business.
• It is generally expressed over a period of time which can be one year, quarter, year to date etc.
• It generally uses accounting principles like matching & accruals in order to represent figures.
• The income statement also has the important feature of assessment of profitability.

Features of cash flow statement:

• The cash flow statement displays the increase & decrease in cash.
• Like income statement, cash flow statement is expressed over a period of time like 1 year, quarter or year to date etc.
• It also undoes all accounting principles in order to show true cash movements.
• It has three sections namely cash from operations, cash used in investing & cash from financing.
• It shows the net change in cash balance from beginning to the end of the period.