Financial Statements was shown under the Reporting of Accounting Process.
Let's study what Financial Statements are and its definition and purpose.
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Financial Statements - provide information about financial position, result of operation, cash flows and changes in equity of enterprises and of individuals.
(Take note that financial statements do not provide all information needed by their users to enable them to make economic decisions. There are a lot of things to consider in decision-making.)
1. Balance Sheet (Statement of Financial Position)
- shows the company's assets, liabilities and shareholders' equity.
- tells whether the company can pay its bills on time; its ability to meet its obligations
- financial flexibility (financial structure) to acquire capital
- ability to distribute cash in the form of dividends to the company's owners
- it is a view of the company's financial positions as of the date it is prepared
2. Income Statement (Profit and Loss Statement)
-shows the earnings and profitability of a business
-includes sales or revenue and expense items.
(There are four statements but let's focus first on basics.)
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Did you know?
Cash Dividend is the money paid to stockholders
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Accounting
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