Financial statements are prepared for the purpose of presenting a periodical review or report on the progress by the management and deal with the (a) status of the investments in the business, (b) results achieve during the period under review. The term financial statements as used in accounting refer to at least two statements which the accountant prepares at the given period of time for the business enterprises. These statements are (a) Profit and Loss Account and (b) Balance Sheet. Balance Sheet is prepared with a view to show the financial position as on a particular date on that date when book of account are closed. The purpose of preparation of profit and loss account is to ascertain the net profit of the trading activities. In case of public limited company financial statements are also includes “profit and loss appropriation account”, sometimes this is also called in the name of statement of sources and application of funds.

Keywords: Financial Statement, Profit & Loss and Balance Sheet.