会计英语unit 11 Financial Statements.pptVIP

Unit 11 Financial Statements Financial Statements 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. They typically include four basic financial statements Balance sheet: referred to as statement of financial position or condition, reports on a companys assets, liabilities, and ownership equity at a specific time. Income statement: referred to as Profit and Loss statement (or a PL), reports on a companys income, expenses, and profits over a period of time. Statement of retained earnings: explains the changes in a companys retained earnings over the reporting period. Cash flows Statement : reports on a companys cash flow activities, particularly its operating, investing and financing activities. For large corporations, these statements are often complex and may include an extensive set of notes to the financial statements and management discussion and analysis. Notes to financial statements are considered an integral part of the financial statements. All the financial statements are built to be used together to present a complete picture of a company’s finance. Purpose of 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. Reported assets, liabilities and equity are directly related to an organizations financial position. Reported income and expenses are directly related to an organizations financial performance. Financial statements should be understandable, relevant, reliable and comparable. Financial statements are intended to be understandable by readers who have a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently. Financial statements may be used by users for dif