A financial statement is a document that presents the financial position and obligations of an individual or organisation. It can take the form of a balance sheet, income statement, or annual report, providing a summary of their financial status on a particular date or over a specific period. A certified financial statement is one that has been reviewed by an independent accountant. A consolidated financial statement combines the financial reports of a company and its subsidiaries, treating them as a single entity. Another type of financial statement is an income-and-expense declaration.
A financial statement is a summary of an individual’s or organisation’s financial situation on a specific date or for a specific period. It includes information about assets and liabilities and can be in the form of a balance sheet, income statement, or annual report. For instance, a company may create a balance sheet at the end of the fiscal year to display its assets (such as cash, inventory, and property) and liabilities (such as loans and accounts payable). An income statement may also be prepared to show the company’s revenue and expenses throughout the year. A certified financial statement is one that has been examined and reported by an independent public or certified public accountant. This type of statement provides assurance that the financial information presented is accurate and reliable. Another type of financial statement is a consolidated financial statement, which combines the financial reports of a company and all its subsidiaries as if they were a single entity. This statement is beneficial for investors and stakeholders who want to assess the overall financial health of a company and its subsidiaries.
A financial statement is a document that provides information about the financial activities and position of a business, organisation, or individual. It typically includes a balance sheet, income statement, and cash flow statement.
Financial statements are important because they provide valuable information about the financial health and performance of an entity. They are used by investors, creditors, and other stakeholders to make informed decisions about the entity.
A balance sheet includes a snapshot of an entity’s assets, liabilities, and equity at a specific point in time. It shows what the entity owns, what it owes, and the difference between the two (equity).
An income statement shows the entity’s revenues, expenses, and profits or losses over a specific period of time. It provides a summary of the entity’s financial performance.
A cash flow statement shows the inflows and outflows of cash and cash equivalents from operating, investing, and financing activities. It provides insight into the entity’s ability to generate cash and meet its financial obligations.
Financial statements are typically prepared by accountants or financial professionals within the entity, following generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS).
Some financial statements are audited by independent auditors to provide assurance about their accuracy and compliance with accounting standards. However, not all financial statements are audited.
Misrepresenting financial statements can lead to legal and financial consequences, including fines, penalties, lawsuits, and damage to the entity’s reputation.
Financial statements are typically prepared on a quarterly and annual basis, but the frequency may vary depending on the entity’s size and reporting requirements.
Yes, financial statements can be used as evidence in legal proceedings, such as disputes over financial transactions, business valuations, and fraud investigations.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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