A financial statement is a collection of reports that limited liability companies have to submit once a year as part of their annual report.
The annual report is a set of documents with information about how your business has performed in the previous fiscal year. You’re required to submit the annual report to the tax authorities once a year.
The financial statements are often audited by government agencies to ensure that they accurately reflect the financial health of your business—and that you pay the correct amount of taxes. This means that the annual report is the most important source of reliable financial data about your business.
The different parts of the financial statement
The financial statement usually consists of a balance sheet, income statement and cash flow statement, and make up one part of the annual report—but it is the most important part because it gives stakeholders, investors, and others vital information to assess the financial health of your business, and to decide if they want to invest or enter into a partnership with you.
It also helps you with your budgeting and financial planning.
Balance sheet
The balance sheet shows what your business owns and owes at the end of the fiscal year.
Income statement
The income statement shows revenue and expenses for the past fiscal year, and whether your business is profitable or not.
Cash flow statement
The cash flow statement shows how much money went into your business and came out of your business in the past fiscal year. This is called cash flow.
There are other
How do I generate a financial statement?
The process of generating the financial statement is called financial accounting. The financial statements have to be created using the accounting principles.
Many businesses generate the reports using their accounting software or they get help from an accountant to generate them.