Distinguish between the balance sheet vs financial statement

The balance sheet vs financial statement are closely related, helping businesses gain a comprehensive overview of their financial position. However, to delve deeper into the details of these two reports, Viindoo will provide further analysis for businesses on definitions, differences, and examples. Let's explore more in the article below.

Understand balance sheet vs financial statement

The financial performance evaluation of a company relies on essential documents such as balance sheets and financial statements. 

However, there are significant distinctions between these two documents because they serve different purposes. Knowing the differences between financial statements and balance sheets can provide insights into how businesses structure and monitor their financial status. 

It is essential for finance professionals and other employees who analyze these documents to comprehend these differences by analyzing both of it, stakeholders can gain a more complete understanding of a company's financial health and make informed decisions regarding investments, lending, and other financial activities.

Understand between the balance sheet vs financial statements

Knowing clearly financial report is essential for finance professionals

What are financial statements?

A financial statement is a record that summarizes a company's financial position, including its profits and expenses, usually period of time, or a quarter or a year. Regardless of its size or industry, every business creates and employs financial statements

Various individuals use financial statements, including employees who analyze their company's profitability and efficiency. These statements help them to compare their performance with that of other firms in the same industry. 

Investors also utilize financial statements to assess how well a company is managing its financial contributions, while creditors rely on them when businesses apply for loans to determine if the business can make the required repayments.

People often use the term "financial statement" for each individual part of it. However, that's not the case. Each section of a financial statement has its own name, and this helps accountants avoid confusion between different types of financial statements. It is important to recognize this common mistake and verify whether the person is referring to the complete financial statement or only a specific section of the document.

>>>> Learn more about: How to prepare the most accurate and complete annual financial statements?

balance sheet vs financial statement

A financial statement is a record that summarizes a company's financial position

What are balance sheet?

The balance sheet is an important component of the annual financial statement. It provides a detailed account of what a company owes and what it owns. The balance sheet is closely related to the annual financial statement, as it reflects all of the company's activities during the past fiscal period

Companies utilize balance sheets to evaluate their spending, resources and liabilities. As part of their evaluation of a company's financial statements, investors and creditors also analyze company financial statements.

Distinguish balance sheet vs financial statement

The balance sheet is an important component of the annual financial statement

Differences balance sheet vs financial statement

Financial statement
Balance sheet
Disclosing the overall financial condition of the company. Present a summary of a company's assets and liabilities
ContentBalance sheet, Income statement, Assets, Liabilities, Shareholder equity

Containing balance sheet and more reports so it will take longer to prepareSince a balance sheet is only a component of a financial statement, it is a relatively brief document. It contains fewer data and therefore requires less time to create and review.
Stage of creation
Final stageAnytime but must be done before creating the financial statement
Understanding Referring to either an entire financial report or any of its individual sectionsSpecific and easily understood because of its same components and objectives.

Applying Viindoo software for balance sheet vs financial statement

Using our Viindoo finance accounting software can assists you in producing both the balance sheet vs financial statements statement quickly and accurately. Below are the steps to use financial accounting software to analyze both statements simultaneously:

  • Enter financial data: The initial step is to input all financial information, such as income, expenses, assets, and liabilities, into the software. This information will be used to create both of it
  • Generate: Utilize the finance accounting software to generate the financial statement and balance sheet. The software will utilize the data you entered to calculate the total assets, liabilities, and equity or inflows and outflows of cash over a specific period of your company.
  • Analyze the balance sheet: Analyze both statements to comprehend your company's financial position or cash utilization. Examine the connection between your company's assets and liabilities, and compute crucial financial ratios such as the debt-to-equity and current ratios. Alternatively, intelligent software can analyze the operating, investing, and financing activities with the financial statement to understand the sources and uses of cash.
  • Comparasion: Conduct a comparative analysis to comprehensively understand your company's financial position. Look for any discrepancies between the two statements and identify areas where you can enhance cash flow or financial health.
balance sheet vs financial statement

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There are four main financial statements: balance sheet. income statement. cash flow statement.

Balance sheets and financial statements are used by various stakeholders, such as investors, lenders, shareholders, and company management. These statements provide valuable information for decision-making, financial analysis, and assessing the financial health of a company.

Yes, balance sheets and financial statements can be audited by external auditors to ensure their accuracy and compliance with accounting standards. Auditing adds credibility to the financial information presented in these statements.

Are balance sheets and financial statements required for all businesses? 

Yes, balance sheets and financial statements are essential for all types of businesses, regardless of their size or legal structure. They are crucial for financial reporting, compliance, and providing transparency to stakeholders.

Use Viindoo's accounting software to easily create a balance sheet vs financial statement, which increases productivity, improves quality, and provides a comprehensive solution with all necessary features. Contact Viindoo via hotline +84 225 730 9838 for more information about our Accounting software to help with your demands.

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Distinguish between the balance sheet vs financial statement
Viindoo Technology Joint Stock Company, Danny Ha April 15, 2023