This document discusses the essential components of financial statements. It explains that financial statements are made up of three primary statements: the balance sheet, income statement, and cash flow statement. The balance sheet outlines a company's assets, liabilities, and equity. The income statement shows revenue, expenses, gains, and losses over a period of time. The cash flow statement displays the inflow and outflow of cash from operating, investing, and financing activities. All of these components together provide important insights into a company's financial performance and health.
10. » Assets
They can be fixed or current assets. Fixed assets
are the ones which remain constant for a very
long period of time such as buildings and land
whereas current assets are ones which can be
readily converted to cash such a securities,
inventory and other short term investments.
11. » Liabilities
These can be debts or legal obligation of a
company which can occur during the business
operations of a company. They are a hindrance
to the growth of the company and can put it at a
disadvantage.
12. » Equity or Owner’s Equity
It is the net value of an asset after deducting
liability. Equity can contain contributions from
shareholders, reserves and retained earnings.
22. It shows the inflow and outflow of
cash in a firm over a particular
accounting period.
23. The important components of
Cash Flow Statements are..
Cash Flow from Operating Activities
Cash Flow from Investing Activities
Cash Flow from Financing Activities
24. » Cash Flow From Operating
Activities
Operating activities are the production of
goods, sales and finally delivery of the finished
goods.
25. » Cash Flow From Investing
Activities
These include cash flows from assets purchase,
gains and losses from investments and other
transactions of the company.
26. » Cash Flow from Financing
Activities
These include the decisions taken by the
company which help it in raising capital and
most importantly repaying investors.
27. Each and every aspect of the financial
statement is important and provides
valuable insights into the working of the
company.