Financial statements are completed every quarter and provide clear insight into the operational health of any business. Financial statements are commonly used by investors, analysts, and reporters to research operational performance.
Are you wondering what goes into a financial statement, and what is it used for? A business’s financial statement will show you detailed and accurate data related to a company:
- Revenue
- Expenses
- Assets
- Liabilities
- Shareholder equity
- And more.
The purpose of a financial statement is to document operational profit and cash flow.
Income Statements & Balance Sheet
Balance sheets and income statements are two essential components of a financial statement. A business’s balance sheet shows its assets, liabilities, and shareholder equity. The balance sheet provides a snapshot of the business’s primary assets during a quarter.
Income statements, on the other hand, show the revenue and expenses during the same period. Income statements are used to show net income (positive or negative) for the quarter.
The combination of income statements, balance sheets, and other documents makes up a company’s financial statement. A financial statement provides the most comprehensive insight into any business for a given reporting period.
Are All Companies Required to Create a Financial Statement?
Small businesses and sole proprietorships are not required to create financial statements. However, if you run a large public corporation, you are required to provide financial statements.
If you are unsure of your financial requirements, it is time to contact a CPA. At NaickerCPA we aid businesses with financial statements, business audits, and tax questions. Contact us today for assistance.
If you have any questions about this article or business taxes, in general, or you want to make an appointment with an accounting professional at Naicker & Associates, please contact us at (604) 469-9369. We are based in Port Moody, BC.
