Question: What Are The 6 Basic Financial Statements?

What are the 5 types of financial statements?

A complete set of financial statements is made up of five components: an Income Statement, a Statement of Changes in Equity, a Balance Sheet, a Statement of Cash Flows, and Notes to Financial Statements..

What are the basic categories used in financial statements?

There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time.

Which financial statement is the most important?

income statementThe most important financial statement for the majority of users is likely to be the income statement, since it reveals the ability of a business to generate a profit. Also, the information listed on the income statement is mostly in relatively current dollars, and so represents a reasonable degree of accuracy.

What accounts are closed at the end of the year?

The temporary accounts get closed at the end of an accounting year. Temporary accounts include all of the income statement accounts (revenues, expenses, gains, losses), the sole proprietor’s drawing account, the income summary account, and any other account that is used for keeping a tally of the current year amounts.

What are examples of financial statements?

Using this information, you can figure out how to prepare several examples of financial statements:Sales: $3,200,000.Cost of goods sold: $1,920,000.Gross Profit: $1,280,000.Administrative overhead: $875,000.Profit before interest and taxes: $405,000.Interest: $32,000.Taxes: $128,00.Depreciation: $57,000.More items…

Who is responsible for the financial statements?

Who Prepares a Company’s Financial Statements? A company’s management has the responsibility for preparing the company’s financial statements and related disclosures. The company’s outside, independent auditor then subjects the financial statements and disclosures to an audit.

How do you assemble personal financial statements?

To create a personal financial statement, follow these simple steps:Create a spreadsheet that has a section for assets and one for liabilities. … List your assets and their worth. … List every liability as well as its worth. … Determine the total of both assets and liabilities. … Determine your net worth.

What is financial statement accounting?

Financial statements are written records that convey the business activities and the financial performance of a company. … Financial statements include: Balance sheet. Income statement. Cash flow statement.

How do you make a financial statement?

Here are the types of financial statements and tips on how to create them:Balance Sheet. … Income Sheet. … Statement of Cash Flow. … Step 1: Make A Sales Forecast. … Step 2: Create A Budget for Your Expenses. … Step 3: Develop Cash Flow Statement. … Step 4: Project Net Profit. … Step 5: Deal with Your Assets and Liabilities.More items…

What is the difference between income statement and balance sheet?

Balance Sheet vs Income Statement: The Key Differences Timing: The balance sheet shows what a company owns (assets) and owes (liabilities) at a specific moment in time, while the income statement shows total revenues and expenses for a period of time.

How do you prepare a monthly financial report?

Follow these steps:Close the revenue accounts. Prepare one journal entry that debits all the revenue accounts. … Close the expense accounts. Prepare one journal entry that credits all the expense accounts. … Transfer the income summary balance to a capital account. … Close the drawing account.