Essential Components of Financial Statement

1. Essential Components of Financial Statements

2. Financial Statements are the single most important source of information needed to make sound business decisions.

3. REALLY!!?

4. Components of a financial statement are the building blocks which are used for constructing financial statements.

5. Financial statements make it easier to understand the earnings and expenditure of a business establishment.

6. The most important Components of a financial statement are listed here…

7. 1. Balance Sheet

8. Balance Sheet helps in keeping track of an individual’s or business entity’s finances.

9. The critical components of Balance Sheet are… • Assets • Liabilities • Equity or Owner’s Equity

10. Assets • They can be fixed or current assets. Fixed assets are the ones which remain constant for a very long period of time such as buildings and land whereas current assets are ones which can be readily converted to cash such a securities, inventory and other short term investments.

11. Liabilities • These can be debts or legal obligation of a company which can occur during the business operations of a company. They are a hindrance to the growth of the company and can put it at a disadvantage.

12. Equity or Owner’s Equity • It is the net value of an asset after deducting liability. Equity can contain contributions from shareholders, reserves and retained earnings.

13. 2. Profit and Loss Statement

14. Profit and Loss statement gives a complete summary of revenue, expenses and costs incurred by a company for a given period of time.

15. The different aspects of profit and loss statement are: • Revenue • Expenses • Gains • Losses

16. Revenue • The money that comes into a company because of its business activities during a particular period of time.

17. Expenses • The operational costs incurred by a company in order to earn revenue.

18. Gains • It’s the increase in the equity of a company through various transactions except from owner’s investments or revenues.

19. Losses • It’s the decrease in equity of a company through various transactions except from distributions to owners or expenses.

20. Did You Know? Another terminology for Profit and Loss is Income Statement

21. 3. Cash Flow Statement

22. It shows the inflow and outflow of cash in a firm over a particular accounting period.

23. The important components of Cash Flow Statements are.. • Cash Flow from Operating Activities • Cash Flow from Investing Activities • Cash Flow from Financing Activities

24. Cash Flow From Operating Activities • Operating activities are the production of goods, sales and finally delivery of the finished goods.

25. Cash Flow From Investing Activities • These include cash flows from assets purchase, gains and losses from investments and other transactions of the company.

26. Cash Flow from Financing Activities • These include the decisions taken by the company which help it in raising capital and most importantly repaying investors.

27. Each and every aspect of the financial statement is important and provides valuable insights into the working of the company.

28. Invensis provides a wide range of Finance and Accounting Services.

29. Finance and Accounting Services provided by Invensis are… • Accounting and Bookkeeping • Tax Preparation Services • Financial Analysis Reporting • Record to Report Services • Payroll Processing Services

30. Invensis is an ISO 9001 and 27001 certified company and has served 200+ clients around the world.

31. Invensis’ Finance and Accounting Services can provide precious insights about your company which can help improve its fiscal aspect.

32. To find out more about the services offered and benefits of partnering with Invensis, please contact us at sales@invensis.net