Reports in accounting

Three reports are typically generated in financial accounting and cover a specific,
predetermined accounting period:

1. Balance sheet: summarises the firm’s assets and liabilities at a given point in time
- usually at the end of an accounting period. This report provides a clear idea of the
company’s financial standing.

2. Income statement: reports the firm’s gross proceeds, expenses, and profit or loss.
This report addresses the income and expenses that are produced both by regular
operating activities, or by ‘non-operating’ activities - income or expenses that are not
directly produced by the business. This is probably the most important of the three types
of accounting reports, as it is commonly used by management to help determine financial
standing and decision-making.

3. Statement of cash flows: analyses the flow of cash into and out of the business.
This report deals only with the cash that moves in and out of the company through
various business activities. It also includes income and loss from any investments made
in the company name. Keep in mind that ‘cash’ also includes credit payments after the
payment is completed.

The creation of these reports typically occurs monthly and is used for internal
planning and decision-making. This is known as 'management accounting'.

The aim is to provide managers with reliable information regarding the costs of
operations and on standards with which those costs can be compared in order to
assist with budgeting.