Meaning of financial statements
Financial statements are the statements prepared by the business concerns at the end of the accounting period to ascertain the operating results and the financial position. The basic financial statements prepared by business concerns are income statement and balance sheet. Income statement includes manufacturing account and trading and profit and loss account. It shows the net results of business activities during an accounting period. Balance sheet is a statement of assets and liabilities which shows the financial position as on a particular date.
Apart from these two basic statements, business concerns may also prepare cash flow statement, funds flow statement and statement of changes in financial position.
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