What are Financial Statements Essay Example | Topics and Well Written Essays - 750 words

What atomic number 18 Financial Statements - Essay ExampleThe main target of financial reporting is to transfer the information, whether qualitative or quantitative, about a certain business to others who are interested in investing. Financial reporting provides financial information regarding the corporations capital investors, creditors and lenders who have to make decisions on their ability as capital providers. It is as a summary of the performance, or capability, in increasing, managing, and utilization of the capital by an entity.Financial reporting is represented by four types of financial statements which show the companys financial position. These financial statements are quite exacting and provide a quantitative overview of the companys financial health. The balance sheet represents the financial situation of a company by giving the assets, liabilities, and owners equity at a particular point in time or it points outs the companys net worth. Assets are economic benefits held a company delinquent to its past transactions. Secondly, liabilities are the debts and obligations that a company had because if the companys past transactions. The income statement, also known as the profit and loss statement shows the companys net profit or loss during a leadn period of time by reporting the companys earning to its investors. The third statement, the statement of currency flow reports the cash flow for the operating, financing and investing activities. Lastly, the statement of retained earnings reports the changes in the retained earnings of the company. Financial statements also include notes which give supplementary information about the companys financial situation by describing the principles used in the accounting format, the explanation of the information in the statements or some other explanation that is not part of the statement.Financial statements also help in the calculation of the financial ratios which are used to assess and visualise the fi nancial situation of the company and these also of assistance in analyzing the statements themselves.