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Financial Statements represent a formal record of the financial activities and position of a business, organization or individual. They are prepared in accordance with established accounting principles, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). These statements provide critical information to stakeholders including investors, creditors, and regulatory bodies for decision making purposes. Financial Statements typically include the Income Statement, also known as the Profit and Loss Statement, which summarizes revenues and expenses over a specific period of time; the Balance Sheet, which provides a snapshot of the company's assets, liabilities, and equity at a particular point in time; and the Cash Flow Statement, which details the inflows and outflows of cash within the business. In Financial Accounting, these statements are used to present the financial position, performance, and changes in financial position of an entity over a period of time. They serve as a tool for external communication, allowing interested parties to evaluate the entity's financial health, profitability, and liquidity.