Financial statements are a key part of any business's financial reporting. They provide insights into an organization's overall financial health and performance. Financial statements can be used to assess a company's solvency, profitability, and other critical economic indicators.
There are four main types of financial statements: balance sheets, income statements, cash flow statements, and statements of changes in equity. Each type of statement provides different information that can be used to evaluate a company's financial position.
Balance sheets show a company's assets, liabilities and shareholder equity at a specific point in time. Income statements show a company's revenue and expenses over a period of time. Cash flow statements show the movement of cash in and out of a company over a period of time. Statement of changes in equity shows the changes in a company's equity over a period of time.
Financial statements are typically prepared on a quarterly or annual basis. Independent accountants often audit them to ensure accuracy and compliance with generally accepted accounting principles (GAAP).
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