Basic Financial Reporting
It is a process that can be divided into three main steps: (1) the preparation of financial statements, (2) the audit of those statements, and (3) the communication of those statements to stakeholders.
The preparation of financial statements includes gathering data, organizing it in accordance with generally accepted accounting principles and other accounting standards, and then summarizing it. Financial statements should comply with generally accepted accounting principles (GAAP) issued by Financial Accounting Standards Board (FASB).
The fundamental financial statements of a business include the balance sheet (or statement of financial position), income statement, cash flow statement, and statement of changes in owners' equity or stockholders' equity. The balance sheet is a snapshot of an organization as of a specific date.