Financial statements

From BANwiki

There are three basic financial statements which, between them, describe the activities and financial state of any business:

• The profit and loss (P&L) account shows how a business performed over a specific period, and shows total revenue and expenditure for that period.
• The balance sheet summarises the financial state of a business at a specific date. Balance sheets are linked by a P&L account, which covers the period between the two dates.
• The cash flow statement summarises cash receipts to and cash payments from the business for a specific period.

Understanding the uses of and differences between these financial statements, and how they are prepared and interact with each other, will enable you to review your performance with greater confidence.

It is difficult to show examples of the financial statements here but you can download a PDF of the full fact sheet as of 19 April 2008. If you have comments, add them to the discussion page.