Written accounting reports put together by a corporate management team that outline the financial conditions of the business over a certain period of time. This can be done quarterly, annually, or every 6 months. Public corporations file with the Securities and Exchange Commission (SEC) each quarter, with the numbers covering the previously finished quarter along with an annual report.
There are 4 main financial statements that accounting uses:
- balance sheets
- income statements
- cash flow statements
- statements of shareholders’ equity
Balance Sheet
The balance sheet is a snapshot of the business at a particular point in time. This is usually covering durations broken down quarterly and annually.
A balance sheet is the listing of the assets along with liabilities. When these two are put together, one can determine the amount of shareholder equity the first has. This will usually be spelled out on its own document but does typically accompany the balance sheet.
The formula used is as follows:
Each side of the formula has to balance out. This is the basis of double-entry accounting. Every time an asset is added, a corresponding liability is required or will be reflected in shareholder equity.