A financial statement is a formal record of the financial activities and position of a business, person, or other entity. It typically includes three main components: the balance sheet, income statement, and cash flow statement. These documents provide valuable information about an entity's financial performance, liquidity, and overall health.[1:23 PM, 3/13/2024] Mian Hassan : Certainly! Here's a more detailed explanation of the three main components of a financial statement:1. Balance Sheet: Also known as the statement of financial position, the balance sheet provides a snapshot of a company's financial position at a specific point in time. It includes three key elements:- Assets: These are resources owned by the company, such as cash, inventory, property, plant, and equipment. Assets are typically categorized as current (expected to be converted to cash or used up within one year) or non-current (expected to be held for more than one year).- Liabilities: These are obligations owed by the company, such as loans, accounts payable, and bonds payable. Liabilities are also classified as current (due within one year) or non-current (due after one year).- Equity: Also referred to as net worth or shareholders' equity, this represents the residual interest in the company's assets after deducting its liabilities. It includes items such as common stock, retained earnings, and additional paid-in capital.The balance sheet equation is Assets = Liabilities + Equity, which means that the total assets of a company must equal the total liabilities and equity.2. Income Statement: Also known as the profit and loss statement, the income statement shows a company's financial performance over a specific period, usually a month, quarter, or year. It summarizes revenues, expenses, gains, and losses to calculate net income or net loss. The main components of an income statement include:- Revenue: The total amount of money earned from selling goods or services.