Intro

Financial statement is a formal record of the financial activities of a business, person, or other entity. In English-a financial statement is often referred to as an account, although the term financial statement is also used, particularly by accountants.

For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements. "The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are directly related to an organization's financial position.

Contd THE FINANCIAL STATEMENTS BEING: BALANCE SHEET: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and Ownership equity at a given point in time. PROFIT & LOSS A/c: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. Profit & Loss account provide information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state. TRADING ACCOUNT : is a part of the financial statement which determines the Gross Profit/Loss during an accounting year.Its main components are Sales, Purchases and all Direct Expenses

Intro STATEMENT OF RETAINED EARNINGS: explains the changes in a company's retained earnings over the reporting period. STATEMENT OF CASH FLOW: reports on a company's cash flow activities, particularly its operating, investing and financing activities. 4 Financial statements helps in decision making by showing where and when money has been spent, by evaluating performance, and by showing the implications of choosing one plan instead of another. Fundamental relationships in the decision-making process: 5scope The commonly used financial statements--balance sheet, income statement, and statement of changes in cash flows-focus on a firm's financial structure and performance over a defined period of time. Although they may conform to generally accepted accounting standards they still fail to provide other information that is equally important to achieving true full disclosure. Accountants have proposed remedies for this neglect by taking a close look at other types of statements: the inflation, value added, employee, social performance, and human asset reports. all types of reports must be taken into consideration. They fail to disclose vital information on the measurement and impact of inflation; the measurement of total wealth generated by the production team, its return to stockholders; necessary information on employees,

Intro The measurement of social costs and the benefits attributable to the effects of organizational behavior on the environment, and the measurement of the value of human assets.