What are Annual Financial Statements - types of statements
Financial statements are a set of documents that show your company's financial status at a specific point in time. The financials statements indicate assets and liabilities. The statements are for financial reporting purposes, indicating the financial condition of the entity.
Financial statements contain data that detail what a company owns. The statements indicate the financial health and tax liabilities.
Annual Financial Statements, or Financial Report, is a structured presentation of relevant financial information of a business, or individual. Financial statements can be simple or complex, depending on the industry and size of the business they represent.
The statements include long term assets, net income, fixed assets, operating expenses, cost of goods sold, cash flows from operating activities for a period of time. It also include assets such as property plant and equipment.
Financial Statements typically include:
- A balance sheet that shows the company’s financial position which summarises a business's assets, liabilities, and owners equity at a given point in time – usually at the end of a financial year.
- An income statement, also referred to as a profit and loss report. Income statements shows the business's income, expenses, and profits for the financial year.
- A Statement of changes in equity, or equity statement, shows changes in equity of the business during the previous financial year.
- A cash flow statement reports on a business's cash flow activities, particularly its operating, investing and financing activities.
Financial Statements are necessary to:
- Make business decisions
- Create a budget
- Attract potential investors
- Apply for finance or a loan
Most accountants can prepare an Annual Financial Statement, but not all of them are authorized to approve it. This is done to ensure that the accountant signing a Financial Statement is knowledgeable and qualified to understand its meaning.
This helps to maintain the accuracy and reliability of the financial information provided. It also helps to protect the interests of stakeholders who rely on the information in the statement. By verifying the accountant's qualifications, it reduces the risk of errors or misinterpretations in the financial reporting process.
Frequently Asked Questions
What is an Annual Financial Statement
An annual financial statement shows a company's financial situation, including assets, liabilities, and results. You calculate, how a company has used its resources over the course of a year. A fiscal year is based on the financial year end of the entity or individual and thus, the annual financial statement provides a picture of the previous year. An annual financial statement is also referred to as an annual report.
What are the Objectives of Financial Statements
Financial statements are a group of important reports that summarise the significant areas of financial performance of an organisation.
What are the four Types of Financial Statements
- Balance Sheet (now known as the statement of financial position)
- Profit and Loss Statement (known as the Statement of Profit and Loss and Comprehensive Income)
- Cash Flow Statement
- Equity Statement
What are the Elements of Financial Statements
- Assets
- Equity
- Liabilities
- Expenses
- Revenue
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