Financial statements refer to the formal type of records of all financial activities representing a person, business, or other entity. It also offers an overview of a person’s or business’ condition financially in short and longer terms. These statements serve as a tool that is used in communicating financial information of a business entity to those who are interested in making well-informed decisions and judgments regarding the financial position of the entity, including the cash flows and results of operation.
Types of Financial Statements
Generally speaking, there are four types of financial statements: income statement, balance sheet, statement of cash flows, as well as statement of changes in owner’s equity. Each of these statements plays a unique role in the business, but all of them are interrelated.
Income statements are also called profit and loss statement, statement of earnings, as well as statement of operations. They usually indicate the profitability of a company in a specific period of time. It also provides a measurement of the revenue sources, deducting the expenses in a given time period. There are different components in the income statement.
The balance sheet is also called the statement of financial position simply because it provides a summary of the resources of the entity, obligations, as well as owners’ claims during a specific period of time. Oftentimes, it is described as the glimpse of the financial condition of the company. Under this type of statement are the assets and liabilities of the company.
Another type of financial statements is the statement of cash flows. It shows how the changes in the income statement and balance sheet influence cash and its equivalent cash flow statement impacts business solvency and liquidity. It is presented into different categories: net cash flows from investing, operation of activities, as well as financing activities.
Financial Statements Service Providers
If you are running a big company, most likely you have a team of HR professionals who can take care of your company’s financial statements. However, if you have a small to medium sized entity, having an on-site team to deal with these documents may be more expensive than what you have initially thought it would be.
One alternative option for this is to hire the services of a third party provider. In this way, you no longer have to deal with the intricacies and complexities of these Financial Statements. All you need to do is to work together with a professional who can assist you all with all the services. Since the professionals are experts in this field, you can be assured of a high-quality output. In this way, you no longer have to worry about reporting obligations related to the filing of income tax returns.