Accounting Glossary

What Is A Financial Statement?


Financial Statement? (Definition)

A financial statement is a report that shows the financial activities and performance of a business.

There are four main types of financial statement:


1. Balance Sheet: a snapshot of your business’s financial condition at a single point in time, such as 12/31/2016. Shows your business assets, liabilities and owner’s equity at that time.

2. Profit And Loss Statement: also called an income statement. Shows your business’s revenues, costs and expenses over a period of time, such as 1/1/2016 to 12/31/2016.

3. Cash Flow Statement: also called a statement of cash flows. Shows changes to the cash coming into and out of your business over a period of time. Only records cash (not all income). Shows whether you can cover short term expenses like bills and payroll.

4. Statement Of Changes In Equity: also called a statement of retained earnings. Shows changes in the equity of your business for a set time period. In other words, changes in how much money your business keeps (rather than pays out to shareholders).


Combined, these statements provide a good view of the financial health of your business.

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