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Financial statements (or financial reports) as formal records of the financial activities and position of a business

Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity.

Relevant financial information is presented in a structured manner and in a form which is easy to understand. They typically include four basic financial statements accompanied by a management discussion and analysis:[2]

  1. balance sheet or statement of financial position, reports on a company’s assetsliabilities, and owners equity at a given point in time.
  2. An income statement—or profit and loss report (P&L report), or statement of comprehensive income, or statement of revenue & expense—reports on a company’s incomeexpenses, and profits over a stated period of time. A profit and loss statement provides information on the operation of the enterprise. These include sales and the various expenses incurred during the stated period.
  3. statement of changes in equity or equity statement, or statement of retained earnings, reports on the changes in equity of the company over a stated period of time.
  4. cash flow statement reports on a company’s cash flow activities, particularly its operating, investing and financing activities over a stated period of time.