Financial statements are an
important management tool. When correctly prepared and properly
interpreted, they contribute to an understanding of the current
financial condition, problems, and possibilities of a company.
This explanation has been prepared
to help financial and non-financial managers and owners make better use
of the information in financial statements.
The Balance Sheet
The Balance Sheet is a “photograph”: It represents, at a
moment in time, the financial position of the business entity.
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The Income Statement
The Income Statement (or
Statement of Operations) is a summary of revenues and
expenses, the latter usually broken down (or summarized)
by major categories from Income from Operations to Net
Income.
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The Statement of Cash Flows
The
Statement of Cash Flows reports the sources and uses
of cash for the period, as separated into three
major classifications: Investing,
Financing, and
Operating
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