INTRODUCTION A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity.

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. METHODOLOGY The data for the study has been collected from various secondary sources like books and journals. OBJECTIVES The main objectives of the study are:   To find out the meaning of financial statement. To find out the procedure of preparing a financial statement.

FINDINGS Preparing the Financial Statements Once the adjusting entries have been made or entered into a worksheet, the financial statements can be prepared using information from the ledger accounts. Because some of the financial statements use data from the other statements, the following is a logical order for their preparation:
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Income statement Statement of retained earnings Balance sheet Cash flow statement

Income Statement The income statement reports revenues, expenses, and the resulting net income. It is prepared by transferring the following ledger account balances, taking into account any adjusting entries that have been or will be made:
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Revenue Expenses Capital gains or losses

  Net income. Capital stock balance Retained earnings. the management can compare them with their internally used financial statements. it is derived by converting the accrual information to a cash-basis using one of the following two methods:  Direct method: cash flow information is derived by directly subtracting cash disbursements from cash receipts. . as well as to the market and industry in which they operate in. When they are used internally. notes. They can also use their own and other enterprises’ financial statements for comparison with macroeconomical datas and forecasts. obtained from the previous statement of retained earnings. accounts receivable. etc. Managers use it to plan ahead and set goals for upcoming periods. Conclusion At regular period public companies must prepare the financial statements. it cannot be derived directly from the ledger account balances of an accrual accounting system. It is prepared using the following information:  Beginning retained earnings. Financial statements show the financial performance of an company. the management and sometimes the employees use it for their own information. They are used for both internal-. financing. It is constructed using the following information:     Balances of all asset accounts such cash. Because the cash flow statement is a cash-basis report. and external purposes. showing sources and uses of cash in the operating. Balances of all liability accounts such as accounts payable. obtained from the statement of retained earnings Cash Flow Statement The cash flow statement explains the reasons for changes in the cash balance. Rather. liabilities.  Indirect method: cash flow information is derived by adding or subtracting non-cash items from net income. and investing activities of the firm.Statement of Retained Earnings The retained earnings statement shows the retained earnings at the beginning and end of the accounting period. etc. obtained from the income statement Dividends paid during the accounting period Balance Sheet The balance sheet reports the assets. When they use the financial statements that were published. and shareholder equity of the company.