The accounting term financial statement refers to a series of documents that reflect the collection and summary of accounting data. Financial statements include the balance sheet, income statement, cash flow statement, and the statement of retained earnings.
The creation of a company's financial statements takes place as part of the accounting cycle. The steps leading up to the production of these documents includes:
- Entering of transactions in the appropriate journals
- Postings made from journals to the general ledger or ledgers
- Preparation of adjusting entries to the general ledger or ledgers
- Preparation of a trial balance
There are four financial statements produced by accountants:
- Balance Sheet: a summary of the company's financial position with respect to assets, liabilities, and owner's equity.
- Income Statement: a summary of the company's operating condition, including revenues and expenses.
- Cash Flow Statement: a summary of the financial resources (funds) consumed by the company as well as those provided by operations, including changes in working capital and cash.
- Statement of Retained Earnings: a reconciliation of the balance held in retained earnings at the beginning and end of each accounting period.
income statement, balance sheet, cash flow statement, assets, liabilities, revenues, expenses, accounting events and transactions, statement of retained earnings, property, plant and equipment disclosures