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07 Review 1 - ARG

Financial statements are documents that show a company's financial performance and include four main types: the balance sheet, income statement, statement of cash flows, and statement of changes in equity. The balance sheet shows the current value of a business, the income statement accounts for revenue, losses, and expenses to determine profit, and the cash flow statement shows how cash flows in and out of the business.

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GTABORADA,JOVELITA S.
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189 views1 page

07 Review 1 - ARG

Financial statements are documents that show a company's financial performance and include four main types: the balance sheet, income statement, statement of cash flows, and statement of changes in equity. The balance sheet shows the current value of a business, the income statement accounts for revenue, losses, and expenses to determine profit, and the cash flow statement shows how cash flows in and out of the business.

Uploaded by

GTABORADA,JOVELITA S.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Explain the different types of financial statements in no more than 300


words.
 Financial statements are documents that show a company's operations and
financial performance. Government organizations, accounting companies,
etc. frequently audit financial statements to guarantee accuracy and for
tax, financing, or investing purposes. The balance sheet, income statement,
statement of cash flow, and statement of changes in equity are the four
basic financial statements for for-profit entities. A similar but distinct set of
financial statements is used by nonprofit organizations. Any document that
aids in demonstrating the financial health of your business, in the broadest
sense. Financial statements are crucial since they reveal details about a
company's earnings, costs, profitability, and debt. The three main types of
financial statements are the balance sheet, the income statement, and the
cash flow statement.
 The first one is a balance sheet that can show the current value of a
business for the period it covers. Looking at your balance sheet can help
you understand if you can meet your financial obligations.
 The second one is the income statement, possibly the most crucial. An
income statement does exactly what a firm needs it to do, which is to keep
a very tight eye on profit and money flowing in. An income statement,
which displays your company's income and expenses over a specified time
period, is also sometimes referred to as a profit and loss statement. The
income statement accounts for revenue, losses, and expenses to determine
whether or not your business has made a profit.
 The last one is a cash flow statement that shows you how money flows in
and out of your business, so you can always see what's available for
working capital. A cash flow statement is essential to show how quickly you
can get cash when you need it. This is because it doesn't take into account
things like goods or purchases made on credit but not yet paid for.

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