The Financial statements are records of income and expenditure, and assets and liabilities of a business firm. Income and expenditure are revenue related transactions. Financial Statements are also known by other names like the Financial Reports. There are two most important Financial statements:

  1. The Balance Sheet, and
  2. The Profit & Loss Statement (or, the Income Statement)

Other two important Financial Statements are: the Cash Flow Statement and the Statement of Changes in Shareholders Equity.


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