Financial statement

Financial statement is a formal report that summarises a business’s money in, money out, assets and debts for a set period or at a specific date. In the UK it usually means the set of accounts prepared under accounting rules for owners, lenders and tax purposes; limited companies file them as statutory accounts, while sole traders typically use them internally and for tax returns.

There are two common uses: statutory financial statements prepared to meet legal requirements, and management accounts prepared for day‑to‑day decisions. The content should be consistent from period to period so you can compare results reliably.

The usual parts of UK financial statements are:

• Statement of financial position (balance sheet) — what the business owns and owes on the reporting date.
• Income statement (profit and loss) — income, costs and the resulting profit or loss for the period.
• Cash flow statement — cash movements grouped by operating, investing and financing activity.
• Statement of changes in equity — movements in owners’ capital, reserves and dividends.
• Notes — extra details and accounting policies that explain the numbers.