Financial Statement Forms: The Different Types?

Answer 1

One can generate a number of different kinds of financial statement forms with either written ledgers or accounting software. When people refer to financial statement forms, they are most likely thinking of the most common types: income statements, balance sheets, cash flow analysis and expense statements. With the help of modern software, there are nearly an infinite number of ways that a person can manipulate data to view net worth, expenses and profit.

As previously stated, the most common of financial statement forms are income statements and balance sheets. The former is also known as a profit-and-loss statement, which lists the sales and gross profit margin, followed by the list of expenses which were incurred during that period, and the purpose is to determine whether that time period was a loss or a profit. It will analyze a range of time rather than a single snapshot like the balance sheet does.

The balance sheet takes a single snapshot at one time and on one date in order to see how the overall health and net worth of a company is. Specifically, it will list the liabilities and the assets of the company in addition to the net worth and the equity of the owner of the business.

Another type of financial statement form is the expense statement. This is like a condensed version of the income statement as it will only list the expenses of a time period. Some decision makers such as a business owner will analyze these forms to figure out exactly how much money the company is losing on expenses. Some examples or large expenses would include electricity, payroll and raw materials.

Also known as a cash flow proforma or a statement or cash flow, the cash flow analysis is similar to the income statement in that it covers a period of time versus a single snapshot. Specifically, it will review the ins and outs of cash during a specific set of time, such as one to three months. There are two ways to use this type of financial statement form: Either a person can use it to project future predicted cash flow or to review past actual cash flow.

Most accounting software is capable of creating these kinds of forms after inputting the information with just a click, whereas written ledgers can be a difficult choice when generating this kind of form. However, just like with any data, "garbage in, garbage out" will apply here since statements are only ever as accurate as the information people put into it.