After all accounts have been adjusted and verified in the adjusted trial balance, it’s time to move on to the seventh step of the accounting cycle—preparing financial statements. This is where the numbers finally come together to tell the story of your business’s performance and financial position.

Whether you’re reporting to management, investors, or regulatory authorities, financial statements are the cornerstone of decision-making. 

What Are Financial Statements?

Financial statements are structured reports that summarize a company’s financial performance and position over a specific period of time. They are generated based on the adjusted trial balance and are typically prepared at the end of each accounting period—monthly, quarterly, or annually.

These statements help business owners, investors, and other stakeholders understand:

  • How much the business earned

  • What the company owns and owes

  • How cash is being generated and spent

The Four Core Financial Statements :
There are four major types of financial statements that are usually prepared in this step: