What type of information does Balance Sheet provide to outside Investors?

Answer 1

Components of Financial statement Financial statements are the end product of the whole accounting process. these show the profitability of the business and the financial position for a specific time. The most common components of thenancial statements are Profit & Loss, Balance Sheet, and Cash flow statements, statement of charges in equity, notes to the account, and comparative figures of previous period Profit & Loss account: The statement prepared to know the gross income and the net income at the end of a particular period is known as profit & loss accounts. In this the expenses are grouped according to the nature and the cost of goods sold is worked out , then the totals of both are deducted fro the sale revenue. The positive result of this shows net income while the negative result represents the net loss sustained by the business. Balance Sheet: The balance sheet is the list of assets and equities prepared at a specific time. It is also known as the statement of financial conditions of a business. The balance sheet focuses on the financial position of a business, rather than the owner. It is usually prepared at the end of each financial year. Cash Flow Statements: Today the concept of Limited companies is ever-growing, due to which the need for regular and legal cash flow arise, even now a days it is required by the law. Cash flow statements represents that how the cash was generated and how it is used by the business. Further it has two components: Cash flow from Operating activities and Cash flow from Financing activities.