What Are The Components Of A Financial Statement?
The main components of a financial statement are the income statement, balance sheet, statement of retained earnings, and cash flow statement.
Also known as an “earnings statement” or “profit and loss statement”, the income statement documents the business’ profitability. The income statement contains company revenue, expenses, and net income / loss over a set period of time. Income statements can be monthly, quarterly, or yearly. Our Poconos CPAs will use data from your general ledger and accounting journals to prepare your income statements.
The balance sheet lists the company’s overall financial position for that specific point in time. Balance sheets contain the assets that you own, liabilities that you owe, and equity. The difference between the assets and liabilities is known as equity interest and belongs to the business owners. Your assets, liabilities, and equity interest should be in balance.
Statement Of Retained Earnings
The statement of retained earnings shows the net income left over after the company has paid its shareholders and investors. This statement also displays how company profits have been distributed over the selected time period. A higher amount of retained earnings is a sign of growth and profitability; this income can then be reinvested into the business for future growth.
Cash Flow Statement
A proper statement of cash flow can illustrate the different uses of cash for your company. Business operations, investments, and financing activities are organized and reported on the cash flow statement and reviewed by our certified public accountants. Cash flow statements help inform potential creditors and investors of your business’ spending, while also helping company management better understand the business’ overall financial position.