The basic financial statements are written records that show financial performance of the company.They provide the true position and the performance of the company. The basic financial statementsinclude: statement of financial position or the balance sheet, income statement or profit and lossaccount, the statement of comprehensive income , cash flow statement, statement of changes inowner’s equity or statement of retained earnings and the notes to financial statements.The balance sheet or statement of financial position provides an entire snapshot of the company onthe particular date such as company’s assets, liabilities and net worth.Income statement or profit and loss account shows the company’s revenue and expenses during aparticular period.The statement of comprehensive income is a statement that provides the summary of a company’s net assets over a given period in time, the changes in company’s equity and other comprehensiveincome.Cash flow statement shows the amount of cash and cash equivalents entering and leaving thecompany at the particular period.Statement of changes in owner’s equity or also known as statement of retained earnings shows thechanges in equity throughout an accounting period.Notes to financial statements provide detailed information to a company’s operation and financialposition of financial statements.There are several balance sheet formats. Balance sheet is composed of assets called active andpassive.There are several different criteria which should be adhered to when entering positions in balancesheet.