Accounting reports

Accounting reports
See also

Accounting reports are a collection of various types of documents that present, among others, the company's revenues and expenses, as well as its financial position. These reports contain information about a specific time period in which the company operated and are usually created at the end of the accounting period (Cambridge University 2011, s. 333).

The company's financial situation is most often shown in the three most popular reports (H. Zhou, L. Qi 2011, s. 300):

  • a balance sheet,
  • an income statement,
  • a cashflow statement.

Balance sheet

Balance sheet (or a statement of financial position) is a type of accounting and financial report that consists of corresponding assets (material resources owned by the company) and liabilities (sources of financing assets). The sum of assets must always be equal to the sum of liabilities. The balance sheet is prepared to present the company's financial position during the last accounting period (accounting period is the specific time period in which the company operated on the market and for which a report is prepared, e.g. year, quarter, month) (G.D. Pandey 2002, s. 240).

Income Statement

Income Statement (a Profit and Loss Statement or Revenue Statement) is a report presenting a summary of revenues and costs arising from business activities for a specific period (e.g. year, month, quarter). It is prepared to determine whether a company has income or loss. The financial result is generated for a given period from the company's assets, not from the assets themselves. The profit and loss Statement is prepared on the principle that all expenses and revenues related to a given accounting period, regardless of whether they are paid or not, are recognized in the profit and loss account. This means that the Income Statement is prepared on an accrual basis when recognizing revenue for a given period, and the expenses should correspond to the recognized revenue (N. Dhameja, K.S. Sastry, K. Dhameja 2008, s. 63).

Cashflow statement

Cash flow is a type of accounting report that is created for a specific period of time, at the end of the accounting period. It is a document showing cash flows from and to a company. In other words, it shows a net statement of revenues and expenses (Cambridge University 2011, s. 118). It provides relevant information that complements the profit and loss account. The group's cash flow data is useful to provide potential investors and company management with a basis to assess the company's ability to use these cash flows. The cash flow statement classifies cash flows in a given period from operating, investing and financing activities (P.M. Rao 2011, s. 268).

"The statement of cash flows (T. Klammer 2017, s. 1-2):

  • provides informations of cash inflows and outflows during a period;
  • provides users with a second flows statement, complementing the income statement;
  • does not replace the income statement;
  • provides information not available on other financial reports; and
  • indirectly provides information on an entity's liquidity and financial flexibility".


Author: Patrycja Czerwiec