Introduction to Financial Statements- Tutorial
Introduction to Financial Statements: Overview
This tutorial gives you an introduction to financial statements commonly used in accounting. There are multiple ways to communicate with users through financial statements. It is important to pick the correct statement in order to best communicate with the appropriate user.
Listed below are some important financial statements, along with their uses.
- Income Statement– used to show how successfully the business performed during a period of time, and will report its revenues and expenses
- Retained Earnings Statement– used to indicate how much of previous income was distributed to the business and the other owners of the business in the form of dividends and how much was retained in the business to allow for future growth
- Balance Sheet– used to present a picture at a point in time of what the business owns (assets) and what it owes (liabilities)
- Statement of Cash Flows– shows where the business obtained cash during a period of time and how the cash was used
Introduction to Financial Statements- Tutorial: A picture from our video lesson, titled “Introduction to Financial Statements,” which shows the names of the commonly-used financial statements in accounting: the income statement, the retained earnings statement, the balance sheet, the statements of cash flows, and the annual report.
Some financial statements are dependent on one another. For example:
- The retained earnings statement depends on the results of the income statement
- Amounts reported on the retained earnings statement are also carried over to the retained earnings section on the balance sheet
- The statement of cash flows relates to information on the balance sheet
Annual Report– The annual report contains many different financial statements in order to give a whole picture of the economic activities in a business. Usually, an annual report contains all four financial statements, in order: income statement, retained earnings, balance sheet, and statement of cash flows.
Introduction to Financial Statements: Video Lesson
The following video lesson, titled “Introduction to Financial Statements,” gives a brief overview and introduction to financial statements. This video is from our complete accounting tutorial, titled “Mastering Accounting Made Easy v.2.0.”