A financial report is a formal document that details the different aspects of the economic status of a business or institution. A financial report may also refer to personal financial statement of an individual. A financial report can be used for varied purposes such as applying for loans or consolidating business strategies, and it can provide an overview of the entire financial status of an organisation.
A financial report can be classified into one of the four basic types of financial statements, namely, balance sheet, income statement, statement of retained earnings and statement of cash flows. These different types of financial report provide snapshots of various aspects of a business. Although these different types of financial report are meant to be simplified, they tend to become complex as the business grows. Explanatory notes are sometimes added to a financial report to make it more comprehensible.
A balance sheet is a type of financial report that provides information on the financial status of a company in terms of assets, liabilities and ownership of equity within a given period of time. Income statement is another type of financial report that is otherwise known as profit and loss statement. It provides information about a company’s income, profits and expenses.
A similar financial report is the statement of retained earnings, which provides details about the retained earnings of a company over certain period of time. The statement of cash flows, on the other hand, is a type of financial report that details the cash flows particularly in the areas of operations, investments and financing activities.
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