0At the end of the accounting period the accounting books are closed and financial statements are prepared. Financial statements are a collection of reports about an organization's financial status.
The main financial statements that are prepared at the end of each financial period are:
1. The Income statement, or the Profit & Loss Account
2. The Balance Sheet
3. The Cash Flow statement
In addition to the above, the Financial Statements also include 'Notes to the financial statements'. The Notes to the financial statements highlight important information that is left out of the main statements.
This is done to make things less complicated to the person reading the financial statements. These notes contain information that is complex and complicated. If this information was to be included in the main statements, the reader would not be able to interpret the main statements correctly.
