1,000 Words Discussing The Four Different Types Of Financial Statements. Explain

Financial Statement Differentiation Name Institutional affiliation Financial Statement Differentiation Introduction Financial statements are summary reports expressed in figures to equip the management, owners, creditors and the government with information for decision making.Financial statements indicate how and where the business obtain cash and how it spends the cash. They also inform of the business ability to repay short-term and long-term debts. Finical statements may also indicate the ability to generate profits from sales, capacity to recover money owed by debtors in time and the assets and liabilities of the business (Ittelson, 2009). The SarbanesOxley Act of 2002 demands that public companies, publicly and accurately disclose their financial statements. Four categories of financial statements are the income statement, balance sheet, statement of cash flow and statement of changes in equity. Income statement Income statements commonly known as theP L accounts indicate the financial performance for any given period of time that is the income and expenses (Ittelson, 2009). However, it is a common practice for businesses to provide quarterly income reports. Lower costs and higher revenue are a sign that the business is operating efficiently. The report is designed by entering the total revenue for the period, then deducting the cost of