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What exactly is financial statement? Financial statements are financial reports that display the details of a company’s financial transactions and dealings. Details included in financial statements are income and expenses, current and total assets, liabilities, ownership equity, and original assets. Basically, financial statements will help business owners, managers, investors, and tax professionals to understand how a certain company’s financial situation looks like. To put things simply, it is how the income and expenses of a certain business are being evaluated in relation to what other similar businesses do.
Now that you have learned what a financial statement is, let us move on to how one comes into being. Before there was a business owner, there was an account book. The account book records when each transaction or sale took place between the owner and the seller.
Financial statements were then recorded in books called ledgers. These ledgers were updated annually with the latest information. This process continued until around the century’s end. With the advancements in technology, the age of business books has officially ended. Instead, business records now can be accessed online. These records can be easily obtained because they are being made available as downloadable files.
These financial statements are now available online and can be retrieved anytime and anywhere. In addition, the availability of electronic communication has made it so businesses no longer need to physically maintain and preserve business ledgers in the past. Now, any information that can be digitally stored can be emailed or uploaded to a website. Online financial statements can then be easily downloaded from the website to the needed accounting software.
A company’s or a business’s financial statements provide valuable information for auditors, creditors, investors, and tax authorities. Basically, it helps people make sense of what the company’s income and expenses really are. The financial statement tells the directors, auditors, creditors, investors, and tax authorities what the company’s status actually is at a given time. It provides an accurate description of the company’s financial condition and of its income, assets, and liabilities as well as the status of its balance sheet. For example, a balance sheet that shows revenue less than expenses tells that the company has lost money rather than making money.
Financial statements also referred to as a statement – also serves as a company’s book-keeping record. Every transaction made by the company is recorded and accounted for. Therefore, every transaction in the company must be accounted for. If a company does not keep accurate bookkeeping records, then its financial statements will be inaccurate. It will cause confusion among the people involved in the company’s operation.
What is the financial statement – also referred to as a statement – helps company managers determine the position of their companies after a period of time. This way, they will be able to make better decisions with their money. When company managers know their financial situation, then they can do something that will be very helpful to their companies.
What is the financial statement – also referred to as a statement – is a type of financial document that has certain specific details that are needed in order for an entity to successfully operate in the financial world. Otherwise, an entity will not be able to function properly. In addition, it will not be able to attract new investors, customers, or other people. Thus, this particular type of document is used to make sure that the financial operations of a company are conducted properly.
Basically, a financial statement – also known as a statement – is prepared by a company or an organization that reports the financial and business transactions and results of business activities. Therefore, this type of document also includes the list of the following items: income and expenses, assets and liabilities, and net worth. The balance sheet, which is one of the most important parts of a financial statement – also called a statement – is used to report the company’s balance. This is composed of the balance sheet, balance dated, and statement of cash flows. All of these things will have an effect on how the company’s financial condition is measured.
Generally speaking, people who write financial statements must understand accounting principles. They need to be familiar with formulas, accounting standards, and other things that would be used in order for them to create reliable financial reports. There are many books and journals that provide basic information on financial statements. One popular book that provides information on what is the financial statement – and more – is Basic Financial Accounting.
Learning what is a financial statement? And what you should know when creating one is that financial statements should be prepared according to the specific requirements of each particular company. As an example, a company that makes cars will usually write their financial statement – and all the other ones that make up their business – using the same accounting principles and standards that they follow for every aspect of the business. However, a cosmetics company may be using a different accounting system. The general methods that companies use when preparing their financial statements – or statements that contain information about an entity can be complex and unfamiliar to people who do not have a background in accounting or finances.
