fjárhagsreikninga

Fjárhagsreikninga, commonly translated as financial statements, are formal records that a company keeps of its financial activities and position. They provide a summary of the financial performance and condition of a business over a specific period. The primary financial statements are the balance sheet, income statement, and cash flow statement.

The balance sheet presents a snapshot of a company's assets, liabilities, and equity at a particular point in time. Assets represent what the company owns, liabilities represent what it owes to others, and equity represents the owners' stake in the company. The balance sheet adheres to the fundamental accounting equation: Assets = Liabilities + Equity.

The income statement, also known as the profit and loss statement, reports a company's financial performance over a period, typically a quarter or a year. It shows revenues earned, expenses incurred, and the resulting net income or loss. This statement is crucial for understanding profitability.

The cash flow statement tracks the movement of cash into and out of a company during a specific period. It categorizes cash flows into three main activities: operating, investing, and financing. This statement is vital for assessing a company's liquidity and its ability to generate cash. Together, these financial statements offer a comprehensive view of a company's financial health and are essential for stakeholders such as investors, creditors, and management to make informed decisions.