Financial Statements

Gabriel A. Listianto, Ph.D., Ak.

Undergraduate Accounting Progam. Sanata Dharma University.
Financial Statements
Companies prepare five financial statements from the summarized accounting
data:
1. An income statement presents the revenues and expenses and resulting net
income or net loss for a specific period of time.
2. A retained earnings statement summarizes the changes in retained earnings
for a specific period of time.
3. A statement of financial position (sometimes referred to as a balance sheet)
reports the assets, liabilities, and equity of a company at a specific date.
4. A statement of cash flows summarizes information about the cash inflows
(receipts) and outflows (payments) for a specific period of time.
5. A comprehensive income statement presents other comprehensive income
items that are not included in the determination of net income.
Accounting in Action 2
Income Statement
The income statement reports the success or profitability of the
company’s operations over a specific period of time.
The income statement lists revenues first, followed by expenses.
Then, the statement shows net income (or net loss).
When revenues exceed expenses, net income results. When
expenses exceed revenues, a net loss results.

Financial Statement
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Income Statement

Note that the income statement does not include investment

and dividend transactions between the shareholders and the
business in measuring net income.
For example, as explained earlier, the cash dividend was not
regarded as a business expense.
This type of transaction is considered a reduction of retained
earnings, which causes a decrease in equity.

Financial Statement
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The Accounting Equation and Income Statement

Financial Statement
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Retained Earnings Statement
Retained earnings statement reports the changes in retained
earnings for a specific period of time.
The time period is the same as that covered by the income
statement.
The first line of the statement shows the beginning retained
earnings amount. Then come net income and dividends. The
retained earnings ending balance is the final amount on the
statement.
Financial Statement
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Retained Earnings Statement

The information provided by this statement indicates the

reasons why retained earnings increased or decreased during
the period.
If there is a net loss, it is deducted with dividends in the retained
earnings statement.

Financial Statement
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Retained Earnings Statement

Financial Statement
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Statement of Financial Position
Statement of financial position reports the assets, liabilities, and
equity at a specific date.
The company prepares the statement of financial position from
the column headings and the month-end data shown in the last
line of the tabular summary.
Observe that the statement of financial position lists assets at
the top, followed by equity and then liabilities.
Total assets must equal total equity and liabilities.
Financial Statement
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Statement of Financial Position

Financial Statement
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Statement of Cash Flows
The statement of cash flows provides information on the cash
receipts and payments for a specific period of time.
The statement of cash flows reports
(1) the cash effects of a company’s operations during a period,
(2) its investing activities,
(3) its financing activities,
(4) the net increase or decrease in cash during the period, and
(5) the cash amount at the end of the period.

Financial Statement
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Statement of Cash Flows

Reporting the sources, uses, and change in cash is useful

because investors, creditors, and others want to know what is
happening to a company’s most liquid resource.
The statement of cash flows provides answers to the following
simple but important questions.
1. Where did cash come from during the period?
2. What was cash used for during the period?
3. What was the change in the cash balance during the period?

Financial Statement
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Statement of Cash Flows

Financial Statement
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Comprehensive Income Statement
In some cases, a corporation must prepare a comprehensive
income statement in addition to its income statement.
A corporation prepares this second statement if it has other
comprehensive income items.
Other comprehensive income items are not part of net income
but are considered important enough to be reported separately.
A corporation adds other comprehensive income to net income
to arrive at comprehensive income.
Financial Statement
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Source:

Weygandt, J.J., Kimmel, P.D., and Kieso, D.E.

2013. Financial Accounting IFRS Edition. 2nd Ed.
John Wiley & Sons, Inc.

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