4 Main Financial Statements
A complete set of financial statements comprised of four reports as follows:
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Statement of financial position
It can be also called balance sheet. The statement of financial position is a summary of a company’s assets, liabilities and equity as of a specific date, usually the last day of the fiscal year. The difference between assets and liabilities is equal to a company’s net worth or equity. A company’s assets are also equal to their liabilities plus owner’s equity, which will show how the assets were financed, either by borrowing money (liability) or using the owner’s money (owner equity).
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Statement of profit or loss and comprehensive income
It can be also called income statement. The statement demonstrates how the net profit was generated from various component including revenue, costs and expenses. It can help users to have better understanding of a company’s profitability and analysis of its performance.
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Statement of changes in equity (either presented in a separate statement or notes to the financial statements)
It demonstrates the summary of movement in owner’s equity (a company’s net worth) during the reporting period arising from net profit for the period, capital contribution and dividend distribution and other changes of reserves.
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Statement of cash flows (optional under Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard)
It shows how much a company’s cash and cash equivalent is generated and used during the reporting period. It is divided into three categories including operating activities, investing activities and financing activities. By comparison of cash flows and net profit for the reporting period, the users may analysis how the company realize its accounting profits to actual cash flows.
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