Understanding Financial Statements:

Financial statements are documents that report a company’s financial performance over a specific period of time. They are used to provide information about a company’s assets, liabilities, equity, income, and expenses. 

The three primary types of financial statements are the balance sheet, the income statement, and the cash flow statement.

• Balance Sheet (Statement of Financial Position): The balance sheet provides a momentary overview of a company’s financial standing at a particular point in time, encompassing assets, liabilities, and shareholders’ equity, thus showcasing the firm’s overall financial value.
• Income Statement (Profit and Loss Statement): The income statement is a financial statement that reports a company’s revenues, expenses, and profits or losses over a specified period of time, typically a fiscal quarter or year. It shows how much money a company has earned and spent during that time period, and whether it has made a profit or loss.
• Cash Flow Statement: The cash flow statement shows how much cash a company has coming in and going out over a period of time. It is divided into three categories: operating, investing, and financing activities.

The Importance of Financial Statements Preparation:

• • Informed Decision-Making
  • Accountability and Transparency
  • Investor Confidence
  • Regulatory Compliance