Financial Statements

Financial statements are created for businesses, nonprofits, and governments. They include balance sheets, income statements, statement of changes in equity, and cash flow statements. They are usually accompanied by notes which explain the various accounting and accounting framework.

Statements can be developed using generally accepted accounting principles, the cash basis, modified cash basis, tax basis and contractual or regulatory accounting. Some entities are required to use a particular accounting framework.

Certified Public Accountants (CPAs) often prepare the financial statements, especially for smaller organizations that may not possess the knowledge to do so. CPAs can audit the statements when requested by the entity. Those statements can also be subject to compilation or review engagements as specified by the AICPA.

Financial statements are often created using software such as QuickBooks or Great Plains. They can also be created in a spreadsheet such as Excel. Entities usually create and share internal statements with management and board members during the year.