financial statement

 A financial statement is a formal record of an individual's or company's financial activities, including their income, expenses, assets, and liabilities. It provides a snapshot of the financial health or performance of the entity at a specific point in time. Financial statements are typically prepared annually, but also quarterly or monthly for some organizations.

There are three main types of financial statements:

1. Income Statement (also known as Profit and Loss Statement or Statement of Operations): This records the revenue earned and expenses incurred by a business during a specific period, usually a year. It calculates the net income or loss by subtracting expenses from revenues.

2. Balance Sheet (also known as Statement of Financial Position): This provides a snapshot of an organization's financial position at a specific date. It lists the assets, liabilities, and equity of the entity, with assets equaling the sum of liabilities and equity.

3. Cash Flow Statement: This shows the cash inflows and outflows over a specific period, highlighting an organization's operating, investing, and financing activities. It indicates how changes in the balance sheet and income statement affect cash and cash equivalents.

These financial statements are prepared following specific accounting principles and standards, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), depending on the jurisdiction and reporting requirements.

Financial statements are crucial for internal management, external stakeholders (e.g., investors, lenders, suppliers), and regulatory bodies to assess an organization's financial performance, make informed decisions, and ensure compliance.