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Simple English definitions for legal terms

financial statements

Read a random definition: Clarity

A quick definition of financial statements:

Financial statements are reports that show how much money a business has and how much it has spent during a certain time period, usually a year. There are three main reports in financial statements: the balance sheet, income statement, and cash flow statement. These reports help people understand how well a business is doing financially. Big companies may also have extra notes and get checked by an outside person to make sure everything is correct. Financial statements follow rules called Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).

A more thorough explanation:

Financial statements are reports that provide information about the financial position and performance of a business during a specific period, usually a year. They summarize financial and accounting information and help investors, creditors, and other stakeholders make informed decisions about the company.

The three main types of financial statements are:

  • Balance Sheet: This statement shows the company's assets, liabilities, and equity at a specific point in time. It provides a snapshot of the company's financial position.
  • Income Statement: This statement shows the company's revenues, expenses, and net income or loss over a specific period. It provides a summary of the company's financial performance.
  • Cash Flow Statement: This statement shows the company's cash inflows and outflows over a specific period. It provides information about the company's liquidity and ability to meet its financial obligations.

Financial statements may also include a statement of changes in equity, which shows how the company's equity has changed over a specific period.

Financial statements are important because they provide valuable information to investors, creditors, and other stakeholders. They help these parties make informed decisions about the company, such as whether to invest in it or extend credit to it.

For example, if a company's income statement shows that it has been consistently profitable over the past few years, investors may be more likely to invest in the company. On the other hand, if a company's balance sheet shows that it has a large amount of debt, creditors may be hesitant to extend credit to the company.

Financial statements are also important for regulatory purposes. Publicly traded companies are required to file financial statements with the Securities and Exchange Commission (SEC) on a regular basis. These statements must be prepared in accordance with Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).

Financial statements are essential tools for understanding a company's financial position and performance. They provide valuable information to investors, creditors, and other stakeholders, and help ensure transparency and accountability in the business world.

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darthaifos33
14:36
like**
darthaifos33
14:36
and UPenn for that matter! Would be greatly appreciated
yay pookie! congrats!
14:39
omg this guy on the deposition is screamingggg
darthaifos33
14:39
And congrats!!!!!!<3
14:49
like it's crazy
i've heard great things about UVA! I visited upenn and hated it so much / felt so uncomfy there and the starbucks by campus got robbed while i was there waiting for my tour to start lol
darthaifos33
14:59
@OptimisticOutlier That sounds terrible, I'm sorry you had to experience that lol. Can I ask what made you feel uncomfortable? Like the sketchy vibes of the city or like the camp\us itself etc.?
darthaifos33
14:59
campus
penn is in a nice area
right next to drexel
it was campus itself, honestly i can't explain what it actually is. I felt the same way when I was touring schools for undergrad, pretty much pulled up to upenn and told my mom i knew i didn't like it and didn't need to take the tour lol
would argue with the nice area piece lol i think all of philly is kinda scary, someone pulled a gun on my team while we were down for a football game at upenn and walking around at night
but that said, i'm pretty happy i moved to pa after school and i know lots of people love upenn!
dear god is that sketchy
definetly safer than how its being described
people are absolutely crwzy
yeah yeah will 10000% agree i've had like bad outlier experiences lol
u are the optimistic outlier after all
true!
how do i tell my boss im quitting and need to take off on monday (visiting ND on monday to meet with dean and check the vibes, was gonna put in my 2 weeks regardless
16:00
NEED
16:00
i luv being an art hoe snob
amlaw
16:38
believe it or not i didn’t miss any calls
OvertReconditeSpider
18:03
Lol all of philly is a dumpster fire
OvertReconditeSpider
18:03
Yet i am moving there for law school in 14 days lol
manifestmoreadmissions
18:56
@OptimisticOutlier: congratulations!!!
21:14
I live in that area. It isn't bad at all
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