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 the financial position of a firm at a particular point of time.
– It shows the financial condition of the business firm at a given date (a particular point in time).
The balance sheet indicates the sources from which the business obtained capital for its operations and the form in which capital is invested on a specific date.
Income statement:
– It is also called a profit-loss statement.
– It shows the firm’s earnings for the period covered, usually half-yearly or yearly.