Corporate Financial Statement

Financial Statements
Financial statements are the formal records related to the financial activities of the business entity. These are
use to track the insights related to company's overall financial performance and position and Cash flows.

Types of Financial Statements:

•Income statement.
•Cash flow statement.
•Statement of changes in equity.
•Balance sheet.
Elements of financial statements

Profit and Loss A/c

Income: A company’s income, also known as revenue or sales, refers to inflows of
economic benefits arising from its ordinary activities.

Expenses: Expenses represent outflows or reductions in economic benefits or Money

spent by the entity while generating revenue or conducting operating activities.

Gains and Losses: Gains and losses are the final net value of the organization’s revenues
and expenses
Elements of financial statements

Balance Sheet
Assets:
Assets are the properties / items / resources owned and controlled by the business

which provide economic benefit in the future and

used to perform the day to day operations of the business to generate revenue.

Based on physical existence - Tangible Assets and Intangible Assets

Based on convertibility - Fixed Assets and Current Assets
Elements of financial statements

Balance Sheet

Liabilities: Liabilities are the company’s obligations or debts, owed to external parties.
Long term Liabilities – Loans, Debentures, Bonds,
Short term Liabilities / Current Liabilities – Sundry Creditors, Bills Payable, Bank
Overdraft

Equity: It reflects the owners’ claims on the entity’s assets. It can be classified into various categories, such
as
Share capital
Reserves and Surpluses
Retained earnings and
Accumulated profits.

Balance sheet equation / Accounting Equation:

Assets = Liabilities + Equity
Limitations

Historical in Nature – Past data but does not reflect the present and future data

Based on different accounting Practices / Methods – Profit or Loss differs from across the methods

Disclosure of only monetary facts – not nonmonetary

Window dressing – situation is shown better than reality

Affected by Personal Judgement – Biased Decisions

Lack of Comparability – different methods

 RIL Financial Reporting - Credit

Steel Supplier & Manufacturer in India | Tata Steel