Accounting information is communicated in the form of financial statements. Financial statements include the following:
- Balance Sheet (Statement of Financial Position)
- Income Statement (Statement of Profit or Loss)
- Statement of Cash Flows
- Statement of Stockholders’ Equity
- Statement of Comprehensive Income
Balance sheet presents the financial position of an entity by reporting assets, liabilities and stockholders’ equity. Balance sheet is also called as the statement of financial position.
Income statement presents net income for a period by subtracting expenses from revenues. Under International Financial Reporting Standards (IFRS), the statement of profit or loss is equivalent to the income statement.
Statement of cash flows reports the sources and uses of cash flows by operating, investing and financing activities.
Statement of stockholders’ equity presents the changes in the components of stockholders’ equity during a period.
Statement of comprehensive income reports which items affected the comprehensive income of an entity. Comprehensive income represents the change in stockholders’ equity, not including the equity investment by stockholders and the distributions to stockholders. Statement of comprehensive income begins with net income and lists the items classified as other comprehensive income (OCI). Other comprehensive income items affect stockholders’ equity, but not a revenue or an expense. Examples of other comprehensive income include the actuarial gains or losses in the defined benefit pension plans, effective portion of gains or losses on hedging instruments in the cash flow hedges, and unrealized holding gains or loss on the available for sale securities.
Statement of comprehensive income and the income statement can be presented either as a combined statement or as two separate, but consecutive statements.