Section 1
- 2. financial statement financial statement means reporting general purpose financial information to persons outside a business organization is a set accounting reports called financial statements. • A set of financial statement consists of four relating accounting reports that summarized in a few pages the financial resource , profitability and cash transactions of a business.
- 3. There are three major financial statement • income statement • Balance sheet statement • Cash flow statement Income statement • Income statement is indicating the profitability of the business proceeding year or other time period. It varies company to company such as • Three months • Four months • Fiscal year
- 4. • In income statement all you have to know are two simple things. • Revenue (money that company takes in) • Expenses (money that company pay out) Important of income statement It shows the profitability of the company It helps in identifying the risk and opportunities and forecast future performance for • Owners • Creditors • Competitors • Investors • Income statement should help investors and creditors future cash flow in number of ways • To evaluate past performance of enterprises • Provided basis of predict future performance
- 5. Statement profit and loss name of the company…………… statement profit and loss for the period ended… sales xxxx Less sales return allowance xxxx Add other income Total revenue xxx Less cost of goods sold xxx Gross profit xxx Less expenses xxx EBIT xxx Less interest xx tax xx xxx Net profit xxx
- 6. Note :cost of goods sold can be calculated Opening stock xxxx Add purchase xxxx Total cost xxxx Less ending stock xxxx Cost of stock sold xxxx