Question

As we begin our Financial Accounting course, one of the key concepts we’ll need to grasp will involve a solid understanding of the standard financial statements. After looking in the textbook, or watching my YouTube videos, or accessing any other source, can anyone get us started into this discussion by choosing just one of the financial statements and explaining what information it contains?

Answer 1

A complete set of financial statements contain Statement of Profit and loss, statement of financial position, cash flow statement, statement of changes in equity and notes to accounts.

Statement of profit and loss contains all information about the amount of revenue and expenditures of an organization earned and incurred. It is important to note that revenues earned and expenditures incurred are to be included in the statement of profit and loss and not the amount received and paid. Revenue and expenditures earned and incurred are considered to determine the amount of profit or loss of the organization for a period.