Financial statements signify the formal record of financial activities of person on his or her business. These financial statements come in written reports that measure the strength of the finance of business, liquidity and performance of a business or company. These statements reflect the effects of finance on the business events and transactions of the entity. There are four types in the financial statements. They are financial position statement, cash flow statement, income statement and changes in the equity. Statements of the financial position are also known as balance sheet that presents the position of an entity in finance at a date. This type of statement comprised of the following elements such as assets and liabilities. Assets are something that the business controls or owns. Liabilities are something that a business be indebted to someone such as bank and creditors.
Income statement is also known as profit and loss financial statement that reports the financial performance of a company or business in terms of loss or profit obtained over a particular period. This type of financial statement is composed of the elements such as expense and income. Income means something that the business earned such as dividend income and sales revenue.
Expense means the expenditure incurred by a company or business over certain period of time such as rental charges and salaries. Cash flow statement is a type of financial statement that presents the progress in the bank and cash balances over certain period of time. The movement or progress in the cash flows is of the segments such as investing activities, operating activities and financing activities.
Changes in the equity are another type of financial statements. This statement is also called as report of retained earnings that provides the detail about the movement in the equity of a business owner over certain period. Movement in the equity of the owner is derived from various components. Some of the components are as follows. Share capital repaid or issued by the business during the period, net loss or profit that is obtained during the period as said in income statement, effects of the change in the accounting policy and loses and gains recognized in the equity directly. In order to obtain more information about the types in the financial statements people can search in the web and find out the detailed information. This can help them in knowing about the types in the financial statement that should be followed in their business.