Financial Statements
What is a financial statement?
A financial statement is a document that provides information about the financial position of an individual or business. It shows income, expenses, assets and liabilities for a period of time, typically one year. Financial statements can be prepared by accountants or bookkeepers to provide an overview of the company’s performance as well as its liquidity and solvency. The three most common types are Income Statement, Balance Sheet and Cash Flow Statement.
Common Types of Financial Statements in Canada
Income Statement
The Income Statement reports the profit or loss for a company or person. It also shows where the income came from. For a business, the main components that make up an Income Statement are Net Sales, Cost of Goods Sold, Gross Profit, Operating Expenses, Other Non-Operating Revenues & Expenses.
Balance Sheet
A balance sheet is a financial statement that reports how much an individual or company owns, owes and the difference between these two. A person’s balance sheet can show their net worth which is calculated by adding up all of their assets and then subtracting any debts they owe.
Cash Flow Statement
A cash flow statement, also known as a profit and loss statement or P&L, is one of the most important financial documents for any company. It shows how much money came in (revenue) versus how much was spent (expenses). The difference between these two numbers is your net income or operating profit. Understanding what a cash flow statement is will help you ensure that you are maximizing profits while minimizing costs.
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Personal Financial Statement FAQ
Who would need a financial statement?
A person or business looking to acuire a loan or purchase agreement would need some kind of financial statement.
How is a financial statement used?
We all have to make decisions in life, and often times we do not know what the best decision is. Should I take out a loan? What are my options with credit cards? It can be difficult to figure these things out if you don’t have access to your financial statement. Financial statement can help a person or business make informed choices.
Is a personal financial statement good for rental applications?
Inclkuding an financial statement with your rental application is sure to impress any landlord and put your application to the top of the pile!
What are financial documents?
-Banking records
-Credit card statements
-Investments
-Tax Reports from CRA
-Income
-Mortgage or Rental information
-Loans or debts
-Assets or liabilities
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