What carries out the accounting and financial forecasting of any type of company is financial statement. As for financial statement, it is a financial report or record compiled usually on a quarterly and annual basis which quantitatively provides the indication of an individual’s, an organization’s, or business’s financial status. There are, according to belief of most experts, generally three financial statements such as: an income statement (Pro Forma Profit and Loss), a balance sheet and a cash flow statement. Although these three financial statements differ by different functions each of them performs, they closely depend on one another. For instance, an income statement hinges upon a balance sheet for debts that have effect on the interest, whereas a balance sheet depends on an income statement for earnings and on a cash flow statement for other financial transactions that affect cash.1
Balance sheet statements are used to provide information about assets and debt of a company at a particular point in time. Besides insight into a company’s debt and assets, a balance sheet includes information about a company’s shareholder equity. What is also important about a balance sheet is that it incorporates a great deal of spending and money management which is not included in income statement. Balance sheet can also show whether a company has enough money to support funding growth, or whether it needs to take on debt or additional stock to sustain itself. Moreover in this regard, it shows whether or not the company is collecting money
from its customers quickly. For that reason, investors should spend enough time...
... middle of paper ...
...orts with confidence in truth.
As we have so far learnt about financial statements, they can be considered to be the sign of everything about the company explaining where the company is and where it is possibly to go.
1 Tim Berry 2008, The Three Main Statements, viewed 8th Dec at
2 Wise Geek 2003-2008, What are Financial Statements, viewed 8th Dec at
< http://www.wisegeek.com/what-are-financial-statements.htm >
3 Plan-As-You-Go 2008, The Three Main Statements, viewed 8th Dec at
4 The Motley Fool1995-2008, how to read a balance sheet, viewed 8th Dec at
5 WikipediA 2008, Financial Statements, viewed 11th Dec at
6 Financial Reporting Council 2008, Financial Reporting Review Panel, viewed 11th Dec at
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