Quick Answer: What Are The Six Basic Financial Statements?

What GAAP means?

Generally accepted accounting principlesGenerally accepted accounting principles, or GAAP, are a set of rules that encompass the details, complexities, and legalities of business and corporate accounting.

The Financial Accounting Standards Board (FASB) uses GAAP as the foundation for its comprehensive set of approved accounting methods and practices..

What do financial statements tell you?

Financial statements are written records that convey the business activities and the financial performance of a company. The balance sheet provides an overview of assets, liabilities, and stockholders’ equity as a snapshot in time.

What are the 4 types of accounting?

Though different professional accounting sources may divide accounting careers into different categories, the four types listed here reflect the accounting roles commonly available throughout the profession. These four branches include corporate, public, government, and forensic accounting.

What are the 5 types of financial statements?

A complete set of financial statements is made up of five components: an Income Statement, a Statement of Changes in Equity, a Balance Sheet, a Statement of Cash Flows, and Notes to Financial Statements.

What is the most important financial statement?

The most important financial statement for the majority of users is likely to be the income statement, since it reveals the ability of a business to generate a profit. Also, the information listed on the income statement is mostly in relatively current dollars, and so represents a reasonable degree of accuracy.

What are the main financial reports?

There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time.

What is not included in financial statements?

Financial statements do not contain any information of human resources. Human resources play an important role in earning profit for a concern but are not included in financial statement. As a result the financial statements fail to exhibit the true picture of a concern.

What is an example of a financial statement?

The primary financial reports are: the profit and loss statement, balance sheet and statement of cash flow. … Using this information, you can figure out how to prepare several examples of financial statements: Sales: $3,200,000. Cost of goods sold: $1,920,000.

How do I prepare a financial report?

Here are the types of financial statements and tips on how to create them:Balance Sheet. … Income Sheet. … Statement of Cash Flow. … Step 1: Make A Sales Forecast. … Step 2: Create A Budget for Your Expenses. … Step 3: Develop Cash Flow Statement. … Step 4: Project Net Profit. … Step 5: Deal with Your Assets and Liabilities.More items…

What goes in the income statement?

The income statement consists of revenues (money received from the sale of products and services, before expenses are taken out, also known as the “top line”) and expenses, along with the resulting net income or loss over a period of time due to earning activities.