Financial statements
– The term financial statement refers to two basic statements that an accountant prepares at the end of specified period of time for a business enterprise.
Balance sheet:
– It is defined as the summary statement of assets and liabilities of a business firm together with net worth at a particular point of time.
– It is a statement of financial position of a firm at a particular point of time.
– It shows the financial condition of the business firm at a given date (particular point of time).
– Balance sheet indicates the sources from which business obtained capital for its operations and the form in which capital is invested on a specific date.
Income statement:
– It is also called profit-loss statement.
– It shows the firm’s earnings for the period covered, usually half yearly or yearly.