Tad Bits on Financial Statements

Tad Bits on Financial Statements

Financial Statements are very important aspects not only in the financial studies but also in the bookkeeping methodologies of various organizations on both private and public sector. The formal definition of financial statements state that they are representations of both the financial position and performance of any entity. Nevertheless, these representations are structured as per the various standards that are followed all over the world. It essentially includes all the records of any financial activities that are performed by person, business or any other economic entity.
A typical finance report or statement has all the records along with the analysis and discussion notes from the management or authorities. There are three parts of a general statement or report:
•    Balance Sheet:  It is that part of the statement, which defines financial position of the entity. They report about the ownership equity, assets and liabilities at a certain point of time
•    Income Statement: This part provides the comprehensive information on income, revenue, expense, profit as well as loss in a particular period that the entity has been subjected.
•    Cash Flows Statement: This part deals with the details of the cash flows in a particular entity for a certain period. The activities that are recorded in this part include investing, financing and operating.
The larger the entity or the organization the more complex is their financial statements. In order, to ensure easy readability of these statements footnotes are always included in them. Including footnotes in any financial statement is considered as one of the best practices in finance industry.

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