Question

What is meant by Financial Statements?

Answer 1

The end product of the financial accounting process is a set of reports that are called Financial Statements. The following generally constitute the financial statements:
$1.$Profit and Loss Account: It is also known as the income statement which presents the result of operations of a business enterprise for a period of time. Net profit or income is the difference between the earned revenues and incurred expenses.
$2.$Balance Sheet: Balance Sheet shows the financial position of a business on a certain date and that is why it is called a statement of financial position. It shows the firm's assets, liabilities and equity capital usually at the close of the last day of the year, which is 31st March in India.
$3.$Statement of Changes in Financial Position(SCFP): Statement of Changes in Financial Position shows where the financial resources or funds have come from and where they have gone or have been used. Working capital based SCFP explains the increase or decrease in the working capital for a specified period of time.