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Financial Statements

A record of all financial activities of a business are maintained within the businesses financial statements. It is important that every business transaction, both payable and receivable is present and up to date on the statements. Though each statement records different types of transactions, each inevitably overlaps with the next. This is why ensuring complete and accurate recording is imperative in the record keeping process.

There consist of four fundamental statements that are needed to keep track of the company’s progress financially.

• Balance Sheet – The record of transactions and balances also known as the accounting identity of the company. This includes the record of current assets, capital stock, liability accounts, and earnings retained. 
• Income Statement – Record depicting all expense and revenue transactions made by the company, with illustration of both capital loss and gain.
• Statement of Cash Flow – Documentation of all incoming and outgoing money with the overall reason for the reduction or addition.
• Statement of Retained Earnings – Record of past and present retained earnings from the beginning as well as the end of the businesses fiscal period. A statement of retained earnings must contain information from both the balance sheet and the income statement, or else it is not a complete retained earnings sheet.

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