Common Financial Information By AllBusiness Editors - Article Example

Website link: http www.allbusiness.com/accounting-reporting/reports ments/1259 html Common Financial Reports Throughout the fiscal year accountants record, organize and keep track of all transactions of a company. At the end of the fiscal year, which is also known as the accounting cycle, accountants use this information to prepare the financial statements. There are four common financial statements: 1. Income Statement: Income Statement basically lists and categorizes all expenses and revenue incurred by the firm during the accounting cycle.

It starts from Sales or revenue generated, in case of service organizations; then subtracts all expenses and losses from sales and adds up all revenue and income. The difference is net income and net loss. 2. Statement of Capital: This statement shows changes in owner's capital account during the accounting cycle. The capital account shows how much does the owner owns; owner can reinvest in the business which is added in capital account, s/he can withdraw capital which is also termed as drawings and is subtracted from the capital account. 3. Balance Sheet: Balance Sheet shows how much your company own, owe and your company's equity.

Balance Sheet is based on equation: Assets = Liabilities + Equity. Balance Sheet provides a snapshot of the company at a specific time, usually end of accounting cycle and this is also known as statement of financial conditions. 4. Statement of Cash Flow: It list down all cash inflow (money coming in the company) and all cash outflow (money going out of the company) by categorizing them into revenues, long-term financing, sales of non-current assets, increase in current liability account and decrease in current assets account.

Reference Common Financial Reports. Retrieved May 20, 2009, from All Business Web site: http://www.allbusiness.com/accounting-reporting/reports-statements/1259-1.html