 As-salamu alaikum and welcome back dear learners. As you know, we have been going through the financial stuff. We have talked about financial management specifically with context to entrepreneurship, business start-ups. From now onwards, we will be discussing financial statements. Again, it is important to understand that whenever you are in a business, you are starting a new business. You are maintaining its financial record, but ultimately you have to prepare financial statements to show an overall position or performance. So, let's start our discussion regarding financial statements. In the discussion of financial statements, first of all, I would like to tell you that you have to understand financial statements from two angles. One is historical financial statement and the other is pro-forma financial statements. If we talk about the format, then there is no difference in the format. So, the good news is that if you know how to make an income statement, then you can make a historical statement as well as a pro-forma statement. But conceptually, yes, there is a difference. What is the difference? Let's talk about it. So, the historical financial statements of learners are prepared after the completion of a certain period. Now, that period can be quarterly or annually. So, the first point that you make historical financial statements is that they show you a past performance. And the second thing is that there is a requirement. When you are running a company, then whatever your controlling body, securities, exchange commission requires you to prepare financial statements. In fact, the listed companies do not only have to prepare them, but they also have to do it publicly. So, first of all, it is important to understand that historical financial statements show you a past performance. They are required, they are necessary, they have to be made. And how do you make them? You can make them on an quarterly basis after every three months. And you can make them on an annual basis. If we talk about performance statements, then they are basically based on projections. Not on past performance, but on projections. You have done some forecasting, some projections. And you make statements of the coming years or the coming periods. We call them performance financial statements. And when you are running a business, then you have to work on performance statements as well, so that you can project that in the coming time, which way your business can go. Comparing with historical financial statements, they are not actually required. They are not required, they are just a planning tool. You make a planning tool for your plan. You see how many percent of the items are set to achieve a specific target in the coming time. So conceptually, this is the difference between historical financial statements and pro forma financial statements. And in our upcoming topics, we will be discussing both. If we go towards statements, then let's first look at the historical financial statements. What are the important statements that you have to prepare? First of all, the income statement. The income statement shows your operations over a specified period of time. Now you have to pay attention to this when we talk about income statement and balance sheet. So first of all, you have to pay attention to this. The income statement is prepared for a specified period of time. Stated period of time. And when we talk about balance sheet, then this is not a period of time, but a point of time. The income statement tells you that over the period, we generated revenue, we did sales. Over the period, we had to incur this cost. And ultimately, this is our profit or loss. Whereas balance sheet is prepared on a point of time. If we are making a balance sheet today, then it shows that in today's history, our company, our firm has so many assets, so many liabilities. This is our equity, this is our network. So this difference should always be clear to you. The income statement that is prepared for a stated period of time. And the balance sheet that is prepared on a stated point of time. And what does balance sheet show us? It shows us the assets, liabilities and equity details of the company. And a third important statement that we will talk about is statement of cash flows. Which especially deals with your cash inflows and cash outflows. Now you can see that when we are talking about cash inflows and cash outflows, there should be a little difference in your mind that when we are talking about income statement, then we will talk about income, we will talk about expenses, and we will also talk about those expenses which are not actually in the form of cash. So to account for these things, we come to the cash flow statement. So in the cash flow statement, what does it show us? It shows us the cash position. Again for a specific period of time. Now what we are talking about is the period of time and the point of time. You should be clear about this difference. When we are saying that a statement for a period of time is being made, then it means that it is showing us the changes in the period for which it is being made. Regarding the items mentioned in that statement. And when we are saying that a statement is being made at a point of time, then it means that the time at which that statement is being made, at that time what is the worth of the items, what are the assets, what are the liabilities, what are the net worth of the company. So all these things should be kept in mind. Now on these things, we will talk more on these statements in the coming topics. We will also try to understand their format. And we will also try to understand which items are in them, how they are organized, and then how to read and understand that information. So be with us for the upcoming topics.