State the meaning of financial statements?
Financial statements are the basic and formal annual reports through which the corporate management communicates financial information to its owners and various other external parties. They are the end products of the accounting process.
These statements specifically refer to the Balance Sheet (position statement) as at the end of the accounting period, the Statement of Profit and Loss, and the Cash Flow Statement. They are summarised reports of recorded facts prepared following accounting concepts, conventions, policies, and standards.
The primary objective of these statements is to provide information about the profitability and financial position of the business to assist shareholders and other users in their economic decision-making.
Explanation
The answer is derived directly from Section 3.1 and 3.3 of the provided text. It defines financial statements as formal annual reports and end products of accounting. It lists the specific components (Balance Sheet, P&L, Cash Flow) mentioned in the context and highlights their nature as summarised reports based on recorded facts and accounting principles. The purpose regarding profitability, financial position, and decision-making is also included as per the 'Objectives' section.