Financial statements are written records that document a company’s commercial activity and financial performance. Government agencies, accountants, firms, and others frequently audit these to guarantee accuracy and for tax, financing, or investment considerations.

Financial statements contain:

1. Equilibrium report
2. Statement of income
3. Statement of cash flow

Balance sheet

It displays the company’s assets, liabilities, and shareholders’ equity. The balance sheet is one of the three key financial statements used to analyze a corporation. In financial accounting, a balance sheet is a summary of an individual’s or organization’s financial position.

Income statement

An income statement or profit and loss account is one of the financial statements of a company and shows the company’s revenues and expenses during a particular period. It shows you the company’s income and expenditures. The income statement also shows whether a company is making a profit or loss for a given period. Also, it indicates how the revenues are transformed into the net income or net profit.

Cash flow statement

It illustrates how changes in balance sheet accounts and income effect cash and cash equivalents and divides the study into operating, investing, and financing operations. It also includes all cash outflows for business activities and investments over a specific period.