Answer to Question #238680 in Management for Gundo

Question

Discuss the components in detail of the following financial statements for a manufacturing

PLC:

a. Statement of Profit or Loss (Income Statement)

b. Statement of Financial Position (Balance Sheet)

c. Statement of Changes in Owners’ Equity

d. Statement of Cash Flows

Answer 1

Statement of Profit or Loss (Income Statement)

The sales and expenses are listed on a profit and loss (or income) statement. It shows you how much money you've made or how much money you've lost. A profit and loss statement is normally completed once a month, quarter, or year.

Statement of Financial Position (Balance Sheet)

A balance sheet, also known as a statement of financial status, shows a company's assets, liabilities, and equity at a given point in time.

Cash, stock, property, plant, and equipment are all examples of assets owned by a company. Liabilities are the debts owed by the company to third parties, such as suppliers, banks, or business loans. After deducting any liabilities from the overall assets in the business, equity is the remaining proportion of the owner's financial interest in the business.

Statement of Changes in Owners’ Equity

An equity statement, also known as a statement of owner's equity or a statement of changes in equity, is a financial statement that a firm is required to submit at the end of a reporting period together with other significant financial records. The statement of changes in equity is also known as the statement of retained earnings in the United States.

The statement of owner's equity shows how the company's equity has changed over time. Earned earnings, dividends, inflows of equity, withdrawals of equity, net loss, and so on are all movements that are normally shown in the equity statement.

Statement of Cash Flows

A cash flow statement is a financial statement that shows how much cash and cash equivalents are coming in and going out of a business. The cash flow statement assesses a company's ability to manage its cash position, or how successfully it generates cash to fulfill debt commitments and support operating expenses. By demonstrating how money went in and out of the business, the statement of cash flows serves as a link between the income statement and the balance sheet.