Josue, John Carlo C.

The Entrepreneurial Mind

BSBA 2.1A 07_Review_1

There are three types of financial statements, and these are Balance sheet, Income
statement and Cash Flow Statement.

First, let us define what a Balance Sheet is. The balance sheet is one of the three types
of financial statements. This balance sheet has a company’s assets, liabilities, and
equity. The total assets and total liabilities and equity must identical because if they
don’t match, then there is a problem on your balance sheet because the balance sheet
must always balance. The second type of financial statement is the Income statement;
The income statement, it indicates whether a business made a profit or a loss during
that time. It is also known as the profit and loss (P&L) statement, because profit or
loss is calculated by deducting all expenses from a company's revenues. The last
financial statement is cash flow. A cash flow statement summarizes all cash inflows
received by a company from continuing activities and external investment sources. It
also includes all cash outflows used to support business operations and investments
during a specific time period. It is seen to be the simplest of all financial statements
since it tracks the cash generated by the organization in three ways: operations,
investment, and finance.