Difference between revisions of "Financial Statements"
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== Definition == | == Definition == | ||
| − | '''Financial Statements''' is a collection of [[Disclosure | disclosures]], typically by incorporated legal entities | + | '''Financial Statements''' is a collection of [[Disclosure | disclosures]], typically by incorporated legal entities. Financial statements are a particular form of general purpose [[Financial Reporting]]. Financial statements provide information about economic [[Resources]] of a [[Reporting Entity]], claims against the entity, and changes in those resources and claims, that meet the scope and definitions of the elements of financial statements. This scope and definitions are in turn articulated in the applicable [[Financial Reporting Standards]]. |
| + | |||
| + | == Elements of Financial Statements == | ||
| + | The elements of financial statements are | ||
| + | * Assets | ||
| + | * Liabilities | ||
| + | * Equity | ||
| + | * Income | ||
| + | * Expenses | ||
== Common Financial Statements == | == Common Financial Statements == | ||
| Line 6: | Line 14: | ||
* The [[Balance Sheet]] or [[Statement of Financial Position]] offers a snapshot of a company's assets and liabilities at a given point in time. | * The [[Balance Sheet]] or [[Statement of Financial Position]] offers a snapshot of a company's assets and liabilities at a given point in time. | ||
| − | * The [[Income Statement]] or [[Profit and Loss Statement]] '''profit and loss report''' ('''P&L report''') | + | * The [[Income Statement]] (or [[Profit and Loss Statement]]) '''profit and loss report''' ('''P&L report'''). This is a statement of ''Financial Performance''. |
| − | * The [[Statement of Comprehensive Income]], or '''statement of revenue & expense''' | + | * The [[Statement of Comprehensive Income]], or '''statement of revenue & expense'''. This is also considered a (complementary) statement of financial performance. |
| − | * The [[Statement of Cash Flows]] reports on an entity's [[Cash Flow]] | + | * The [[Statement of Cash Flows]] (or [[Cash Flow Statement]]) reports on an entity's [[Cash Flow]] |
* The [[Statement of Changes in Equity]] or '''statement of equity''', or '''statement of retained earnings''' | * The [[Statement of Changes in Equity]] or '''statement of equity''', or '''statement of retained earnings''' | ||
Latest revision as of 16:38, 6 September 2021
Contents
Definition
Financial Statements is a collection of disclosures, typically by incorporated legal entities. Financial statements are a particular form of general purpose Financial Reporting. Financial statements provide information about economic Resources of a Reporting Entity, claims against the entity, and changes in those resources and claims, that meet the scope and definitions of the elements of financial statements. This scope and definitions are in turn articulated in the applicable Financial Reporting Standards.
Elements of Financial Statements
The elements of financial statements are
- Assets
- Liabilities
- Equity
- Income
- Expenses
Common Financial Statements
The precise composition (number, title and content of financial statements) is part of the Financial Reporting Standards under which an entity is Reporting its financial condition. A typical set might include[1]:
- The Balance Sheet or Statement of Financial Position offers a snapshot of a company's assets and liabilities at a given point in time.
- The Income Statement (or Profit and Loss Statement) profit and loss report (P&L report). This is a statement of Financial Performance.
- The Statement of Comprehensive Income, or statement of revenue & expense. This is also considered a (complementary) statement of financial performance.
- The Statement of Cash Flows (or Cash Flow Statement) reports on an entity's Cash Flow
- The Statement of Changes in Equity or statement of equity, or statement of retained earnings
Fundamental Requirements
Reporting on the state of an entity over time requires in principle only two types of reports:
- A Stock Variable report that lists measured characteristics of an entity at a snapshot of time
- A Flow Variable report that lists changes in measured characteristics over an interval of time
These two fundamental reports are in principle linked via identities (conservation laws) that stipulate that changes in stock variables are affected only through flow variables.
The balance sheet report is the only financial statement that focuses on stock variables. The other statements are flow reports that single out specific flows and stocks for their particular importance:
- Cash as the simplest / most fundamental financial asset in monetary systems / economies
- Equity as the principal contractual relationship providing investment Capital
See Also
References
- ↑ Smaller entities and simpler operations might have further options to reduce the number / content of reports
