Accounts definition
Broadly speaking, there are four main types of financial statement you need to know about. These statements, or accounts, are prepared at the end of a set period of time to reflect the profits and losses recorded during that period, and therefore the company’s overall financial position at the end of it. These accounts are important because they are used by managers, as well as creditors, to measure the performance of a company. The account types are:
- Balance statement (can also be called the statement of financial position)
- Income statement (can also be called the profit and loss statement)
- Cash flow statement
- Statement of changes in equity
For more explanations of common accounting terms, check out our detailed glossary here
