Financial statement
lastmod 2023-06-20created 2021-09-255 edits
Financial statements (financial reports) are documents that show a company's financial position, operating performance, and so on. They are sometimes used for internal purposes to understand a company's performance, but listed companies are required to disclose them to the general public at each annual closing.
After the Industrial Revolution, the emergence of joint-stock companies promoted the enlargement of capital and the growth of investors' wealth. Meanwhile, companies came to bear the responsibility of balancing the interests of stakeholders, including these investors as well as creditors such as financial institutions, employees, consumers, and public institutions, along with various other social responsibilities; financial statements are what companies disclose about their financial position and operating performance over a certain period for this purpose.
The basic financial statements are the statement of financial position, the statement of comprehensive income, the statement of changes in equity, and the cash flow statement. The statement of financial position is prepared as of a specific point in time, while the statement of comprehensive income, statement of changes in equity, and cash flow statement are prepared for a specific period. The statement of comprehensive income is prepared on an accrual basis, and the cash flow statement on a cash basis.
When two or more companies are legally separate entities but are bound by a parent-subsidiary relationship and are thus economically a single entity, the parent company must prepare consolidated financial statements that include the assets, liabilities, equity, revenues, expenses, and so on of its subsidiaries.
Statement of financial position
How much are you worth?
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Statement of comprehensive income
How much are you making these days?