Financial Statements
Step 11 of the Accounting Cycle: The final reports that communicate the financial health of the business to stakeholders.
Section (a)
Trading Account
The first part of the final accounts, used to determine the result of buying and selling of goods.
Primary Goal:
Calculate Gross Profit
Section (b)
Profit & Loss Account
Summarizes all indirect expenses and incomes to find the final net result of the business.
Primary Goal:
Calculates Net Profit
Section (c)
Balance Sheet
Liabilities
Capital
Loans
Creditors
Expenses
Assets
Cash
Stock
Debtors
Furniture
"Financial statements are the end product of the accounting process. They summarize months of transactions into a few pages that tell the story of the business's success and stability."