Financial Statement

Financial statements (or financial reports) are formal records of

the financial activities and position of a business, person, or
other entity.
There are 4 financial statements
1. Income Statement
2. Balance sheet Statement
3. Cashflow Statement
4. Statement of shareholders’ equity

1. Income Statement
An income statement is a financial statement that shows you
the company's income and expenditures.
2. Balance Sheet
A balance sheet is an accounting report that provides a
summary of a company’s financial health for a specified period.
Also known as a statement of financial position, the summary
reports the company’s assets, liabilities, and equity in one page.
3. Cash Flow Statement
A cash flow statement is a financial statement that summarizes
the amount of cash and cash equivalents entering and leaving a
company.
The cash flow statement measures how well a company
manages its cash position, meaning how well the company
generates cash to pay its debt obligations and fund its
operating expenses.

The difference between income and expenses is simple: income

is the money your business takes in and expenses are what it
spends money on

Income statement is made on period

What are your sales in the current year or what are your cost in
the current year?
Balance sheet as in date
Says what is your assets till date what are your liabilities till
date
Assets, Liabilities, & Equity
Assets is future income generating resource
Assets is cash out flow for future income example Machinery
purchased
Expenses is cash out flow for current income example
Advertising expense.
Liabilities what the business owns
Cash inflow to the business example loan (Debt)
Revenue cash inflow to the business
Equity is owners’ capital introduced to start a business
Later for expansion
Example Equity capital, owners fund

Basic rules of accounting

Assets =Liabilities + Equity

Basic 5 element of accounting are

Assets
Liability
Equity
Expenses
Revenue