Financial statements are the end products of the accounting process that reveal the financial results of a specified period and financial position as on a particular date. The process of preparing these statements involves the following steps:

Statement of Profit and Loss is prepared first for a specific period to determine the operational results of an undertaking. It is a statement of revenue earned and the expenses incurred for earning that revenue. This performance report shows the changes in income, expenses, profits and losses resulting from business operations during the year between two balance sheet dates.

Balance Sheet is then prepared as on a particular date, typically at the end of the financial year (e.g., 31st March). It shows the financial position of the company by presenting assets, liabilities and equity in a structured format.

Both statements are prepared following accounting policies consistently, accounting standards prescribed in the Companies Act, and accounting concepts, principles and procedures. Companies registered under the Companies Act 2013 must prepare these statements in accordance with Schedule III to harmonise disclosure requirements with accounting standards.

The statements must be arranged in proper form with suitable contents so that shareholders and other users can easily understand and use them for their economic decisions in a meaningful way.