What is Financial Statement?

What is Financial Statement?

According to Meigs and Meigs (2003), financial statement are a structured representation of the financial position and financial performance of an entity. The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.

Financial statements also show the results of the management’s stewardship of the resources entrusted to it. To meet these objectives, financial statements provide information about an entity’s:

i) Assets

ii) Liabilities

iii) Equity

iv) Income and expenses, including gains and losses

v) Contribution by and distribution to owners in their capacity as owners, and

vi) cash flows

A complete set of financial statement comprises:

1) A statement of financial position as at the end of the period:

2) A statement of comprehensive income for the period;

3) A statement of changes in equity for the period:

4) A statement of cash flow for the period.

5) Notes of Account comprising a summary of significant accounting policies and other explanatory information; and

6) A statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements or when it reclassifies items in its financial statements.

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