Financial statement is the one that presents an overview on finances of the company. It supplies managers and investors with the information about the money made by the company over the period of time being reported. It details revenue earned and expenses incurred thus showing the gross gain or loss.
The balance sheet so created shows the financial position of the company at a particular point of time. The balance sheet provides information on what the company owns (its assets), what it owes (its liabilities) and the value of the company to its stockholders (the shareholders’ equity) on a specific date. It is made up of three parts: Assets, Liabilities and owner’s equity (Net Worth of the firm). The relation between the three is as follow:
Components of Total Assets on the balance sheet are listed in order of liquidity and maturity. This cash flow statement shows the firm’s net income by defining the company’s cash inflow and outflow.