The main objective of the financial statement is to true, relevant and timely information to all its audience. It also reflects the effects of economic events on the business.
Financial statement reporting, business events are categorized into three types: financing, investing, and operating events. When a business is started finance needs to be arranged. With this finance the business invests in assets for conducting business operations.
Periodically, owners and creditors want financial information about the business. Creditors may call for information less frequently to evaluate the company's ability to repay a loan.
The basic financial statements consist of:
Income statement (profit and loss statement): describes revenue and expense events that occurred during the reporting period.
Balance sheet: describes the business's assets, its liabilities, and the owners' equity in the business as of the last day of the reporting period.
Statement of cash flows: reports cash inflows and cash outflows from financing events, investing events, and operations during the reporting period.
Historical financial statement
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Financial Statement