Question

What are the three key financial statement? Explain their purpose and type of information provided by each.

Answer 1

Following are the three key Financial Statements:-

1. Balance Sheet:- Balance Sheet shows the value assets and liabilities and shareholders' equity of an entity on a particular date(i.e. year end/ reporting date)

2. Income Statement: Income Statement shows the revenues, incomes, expenses and losses made by an entity during whole reporting period(normaly during whole financial year).

It basically shows the net profit/losse for a particular period.

3. Cash Flow Statement: It shows the cash receipts and cash payment during a particular period.

It shows cash inflows and outflows under three different headings lilke:- cash flow from operating activities, cash flow from investing activity and cash flow from financing activity.