Question

Describe the financial statements required to report out the accounting results

Answer 1

The following four financial statements are required to report the accounting results:

Income statement - It is a financial statement that reports the revenue generated, expenses incurred, and profits earned during a period. It shows the results of the business operations during a period.

Balance sheet - It is financial statement that reports the assets owned by a company, liabilities owed by it, and the equity of the owners of the company at a given point of time which is usually at the end of the reporting period. It shows the position of the business at a point of time.

Statement of cash flows - It is a financial statement that reports amount of cash inflows and outflows during a year along with the sources from which the cash was generated and the reasons for which cash was used. It is prepared in three sections, namely, the operating activities section, investing activities section, and financing activities section.

Statement of retained earnings - It is a financial statement that reports the total retained earnings of a business since it was started. Any increase or decrease in the retained earnings during a period over the preseeding year is also reported in this statement along with the reasons for such increase or decrease.