Financial statements convert a closed trial balance into a balance sheet, a statement of profit and loss or income-and-expenditure account, a cash-flow statement where required, and notes that disclose accounting policies, contingencies, related parties, and statutory information. For companies, the presentation follows Schedule III and the applicable Accounting Standards or Ind AS. For firms, trusts, and individuals, the format follows the governing law or the reporting need of the users.
Preparation includes grouping of ledgers, review of cut-off for sales and purchases, confirmation or reconciliation of major balances, provision for expenses and taxes, and depreciation as per the policy adopted. Comparative figures and previous-year regroupings are checked so that the two years can be read together.
Notes cover contingent liabilities, capital commitments, micro-enterprise dues where the MSME disclosure applies, and events after the reporting date. Draft statements are reviewed with the person who approves them before they are signed or handed to the statutory auditor.
The statement file stores the mapping from trial balance to line item so that a later audit or tax computation can trace every figure.