FINANCIAL STATEMENTS

Financial statements are the most comprehensive
way of communicating financial information about a
business enterprise, and a wide array of users—from
investors and creditors to budget directors—use the
data it contains to guide their actions and business
decisions. Financial statements generally include the
following information:
● Balance sheet (or statement of financial position)—
summarizes the financial position
of an accounting entity at a particular point
in time as represented by its economic resources
(assets), economic obligations (liabilities),
and equity.
● Income statement—summarizes the results
of operations for a given period of time.

● Statement of cash flows—summarizes the
impact of an enterprise’s cash flows on its
operating, financing, and investing activities
over a given period of time.
● Statement of retained earnings—shows the
increases and decreases in earnings retained
by the company over a given period of time.
● Statement of changes in stockholders’equity—
discloses the changes in the separate
stockholders’equity account of an entity,
including investments by distributions to
owners during the period.
Notes to financial statements are considered an
integral part of a complete set of financial statements.
Notes typically provide additional information at the
end of the statement and concern such matters as
depreciation and inventory methods used in the statements,
details of long-term debt, pensions, leases,
income taxes, contingent liabilities, methods of consolidation,
and other matters. Significant accounting
policies are usually disclosed as the initial note or as a
summary preceding the notes to the financial statements.