A financial statement can take many forms.
The first question to ask is whether the financial statement is for personal or business use. Individuals often have to prepare personal financial statements if they are looking to obtain credit, usually for a large purchase such as a vehicle or home. Often the lender will have a preprinted form that the individual will simply fill out with the necessary information, such as their checking and savings amounts, investments or real estate and their debts, such as credit card balances, car loans and mortgages. This financial statement is only required when needed.
Businesses prepare financial statements in a somewhat similar fashion but the information is much more detailed, prepared on a periodic basis rather than when needed and can contain information that is useful to both an outside party or the owner or management of the business itself. Here we will focus on the need of a business to prepare a financial statement and how it is prepared.