MEANING OF FINANCIAL STATEMENTS

Every firm likes to measure the performance of its business operations in terms of profit or loss.It also likes to know the values of its assets and liabilities on the closing date of accounting period. In order to to ascertain its income and also to assess the position of assets and liabilities statements prepared are known as financial statements. These statements are also known with their traditional name as final accounts.

Financial statements are divided in two parts,i.e., income statements and position statements. The term income statement is traditionally known as trading and profit & loss account and position statements is known as balance sheet.