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Simple English definitions for legal terms
financial statement
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A quick definition of financial statement:
A financial statement is a report that shows how much money a person or organization has and how much they owe. It can be a balance sheet, income statement, or annual report that summarizes their financial condition on a specific date or for a specific period. A certified financial statement is one that has been checked by an independent accountant. A consolidated financial statement combines the financial reports of a company and all its subsidiaries as if they were one entity. Another type of financial statement is an income-and-expense declaration.
A more thorough explanation:
A financial statement is a document that summarizes an individual's or organization's financial condition on a specific date or for a specific period. It reports assets and liabilities and can take the form of a balance sheet, income statement, or annual report.
For example, a company may prepare a balance sheet at the end of the fiscal year to show its assets, such as cash, inventory, and property, and its liabilities, such as loans and accounts payable. An income statement may also be prepared to show the company's revenue and expenses during the year.
A certified financial statement is one that has been examined and reported by an independent public or certified public accountant. This type of statement provides assurance that the financial information presented is accurate and reliable.
Another type of financial statement is a consolidated financial statement, which combines the financial reports of a company and all its subsidiaries as if they were a single entity. This type of statement is useful for investors and stakeholders who want to see the overall financial health of a company and its subsidiaries.