Primary Financial Statements of a Business
This list gives details of the three primary financial statements in the running of a business. These statements record your business’s performance, letting you analyse and identify where you’re strong and not-so-strong in your finances:
Profit and loss account: A summary of sales revenue and expenses that determines the profit (or loss) for the period that has just ended. The profit and loss account also summarises the outflow of assets for expenses during the period leading down to the well-known bottom line, or final profit, or loss, for the period.
Cash flow statement: The cash flow statement summarises the business’s cash inflows and outflows during the period. The first part of this statement calculates the net increase or decrease in cash during the period from the profit-making activities that are reported in the profit and loss account.