Do you know what financial statements look like? Despite what often feels like daily interactions with financial data, many people don’t actually know the details or specifics of how to read financial data.
Don’t find yourself in the dark! There are several types of financial statements you have in order to make the most of your company, no matter what industry it may be in.
In this guide, we’ll go over what financial statements are, as well as several of the different kinds that exist.
Read on to learn more.
The Different Types of Financial Statements
There are four different types of financial statements that exist today. They are the balance sheet, income statement, statement of cash flows, and statement of shareholders’ equity.
Each one provides different information that is used in the financial audit process. And also, these four types of finances are used as business ownership to gain an understanding of the company’s financial position and performance.
Balance Sheets
Balance sheets show what a company owns (assets) and what it owes (liabilities). This information can be used to determine a company’s net worth.
This sheet also called the statement of financial position, reports the company’s assets, liabilities, and equity at a specific point in time.
Assets are valuable items that a corporation has. This often means that they can be employed by the business to create goods or render services that can be sold, or they can be sold themselves.
Physical items like trucks, plants, equipment, and inventories are considered assets.
On the other side, liabilities contains pledges to future consumers for the provision of products or services. Balance sheets are the most crucial when it comes to understanding a company’s liabilities.
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Cash Flow Statements
The statement of cash flows shows a company’s cash inflows and outflows over a specific period of time, and the statement of shareholder equity shows the changes in a company’s equity over a specific period of time.
Income Statements
The income statement shows a company’s revenue, expenses, and net income for a specific period of time. And also it shows how much revenue a company has generated and what expenses it has incurred.
This information can be used to assess a company’s financial performance and to make decisions about where to allocate its resources.
Statement of Shareholders’ Equity
Statement of shareholders’ equity shows how much ownership a company’s shareholders have in the company. This information can be used to determine whether a company is doing a good job of increasing shareholder value.
Your Financial Growth Is in Your Hands
In conclusion, there are four different types of financial statements that exist today.
However, there are other, more specialized statements, like the Statement of Changes in Financial Position, but these are less common. Financial statements are important for businesses to track and understand their financial position and performance.
Do you need more helpful articles like this one to guide your finances? Then you should check out our other post! Keep exploring our website.
