Balance sheet - A financial statement that provides a snapshot of a company’s financial position at a specific point in time. It lists assets, liabilities, and shareholders' equity, showing what a company owns and owes., Assets - Resources owned by a company that have economic value and can provide future benefits. Examples include cash, inventory, equipment, and real estate., Liabilities - The financial obligations or debts a company owes to others, such as loans, accounts payable, and salaries payable., Shareholders’ equity - The portion of a company's total assets that belongs to its owners after all liabilities have been deducted. It represents the residual interest in the business., Assets = Liabilities + Shareholders’ Equity - This is the fundamental accounting equation that ensures a company’s financial records are balanced. It states that a company’s total assets are financed either through liabilities (debts) or shareholders’ equity (owners' investment)., Income statement - Also known as the profit and loss statement, it shows a company’s financial performance over a period of time by reporting revenues, expenses, and net profit or loss., Profit - The financial gain a company makes when its total revenue exceeds its total expenses. If expenses are higher than revenue, the company incurs a loss., Cash flow statement - A financial statement that tracks the movement of cash in and out of a company. It is divided into three sections: operating activities, investing activities, and financing activities, helping assess a company’s liquidity and cash management.,

Understanding financial statements

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