" The focus of this discussion is accounting principles underlying financial statements. Financial statements, which are compiled periodically, communicate to interested parties the data that have been recorded, processed, and summarized by a firm's accounting system. Financial statements include numerical tables as well as information and explanations incorporated into footnotes and supplementary sections. If financial statements are to present fairly the financial position and results of operations of a firm in conformity with generally accepted accounting principles, they must include a balance sheet, an income statement, a statement of changes in retained earnings, a statement of changes in financial position, and disclosure of changes (Accounting Principles Board (APB), 1970, Statement No. 4). A brief summary of these statements follows."
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