What are Financial Statements?
Financial Statements are a summary of all transactions to an account. They are produced weekly for each organization and placed in the treasurer’s mailbox. Treasurers are responsible for reconciling their account to the financial statements. Discrepancies should be brought to the attention of the Director of SA Programs, Personnel & Finances immediately.
Financial statements are records that provide an indication of an individual’s, organization’s, or business’ financial status. There are four basic types of financial statements: balance sheets, income statements, cash-flow statements, and statements of retained earnings. Typically, financial statements are used in relation to business endeavors. Balance sheet financial statements are used to provide insight into a company’s assets and debts at a particular point in time. Information about the company’s shareholder equity is included as well. Typically, a company lists its assets on the left side of the balance sheet and its debts and liabilities on the right. Sometimes, however, a balance sheet has assets listed at the top, debts in the middle, and shareholders’ equity at the bottom. Income financial statements present information concerning the revenue earned by a company in a specified time period. Income statements also show the company’s expenses in attaining the income and shareh
There is a perception that financial statements are complex and can only be interpreted by professional accountants. On the contrary, once you become familiar with the overall concepts and the terminology used, you will have an appreciation for the valuable information they contain and will understand how to apply your knowledge to evaluate the business.
Financial statements usually include the balance sheet, income statement (sometimes called a profit or loss statement) and the cash flow statement. They are prepared from business records at the end of each accounting period, but they can also be done on a monthly or quarterly basis. Annual accounting periods usually represent a fiscal year or a tax year. Financial statements may be either historical that is, from records kept over timeor they may be pro forma, which include estimates of future income and expenditures, net worth or cash flow. Annual pro forma statements range from one to five years and are usually required by financial institutions as part of the operator’s business plan.
