**Financial Statements are a part of Accounting**

**Explanation:**

Financial statements are an essential part of the accounting process. They are prepared by an accountant or a bookkeeper to summarize the financial transactions and the financial position of a business. These statements provide vital information about a company's performance, liquidity, profitability, and financial health. They are used by management, investors, creditors, and other stakeholders to make informed decisions.

**1. What are Financial Statements?**

Financial statements are formal records of a company's financial activities. They provide a comprehensive view of a company's financial performance and position over a specific period. The three primary financial statements are:

- **Income Statement:** Also known as the profit and loss statement, the income statement shows a company's revenues, expenses, and net income or loss for a specific period. It helps assess the profitability of a business.

- **Balance Sheet:** The balance sheet presents the financial position of a company at a specific point in time. It shows a company's assets, liabilities, and shareholders' equity. It provides information about a company's liquidity and solvency.

- **Cash Flow Statement:** The cash flow statement tracks the cash inflows and outflows of a company during a specific period. It provides information about a company's operating, investing, and financing activities. It helps assess a company's ability to generate cash and meet its financial obligations.

**2. Role of Financial Statements in Accounting**

Financial statements play a crucial role in the accounting process. They serve several purposes, including:

- **Providing Information:** Financial statements provide reliable and relevant information about a company's financial performance and position. This information helps stakeholders make informed decisions.

- **Evaluating Performance:** Financial statements help evaluate a company's profitability, liquidity, and overall financial health. They allow management to identify strengths, weaknesses, and areas for improvement.

- **Meeting Legal Requirements:** Financial statements are required by law in most jurisdictions. They must be prepared and presented in accordance with accounting standards and regulations.

- **Assisting in Decision-making:** Financial statements assist management, investors, creditors, and other stakeholders in making decisions. They help assess the viability of investment opportunities, evaluate creditworthiness, and analyze the financial stability of a company.

**Conclusion**

In conclusion, financial statements are an integral part of the accounting process. They provide crucial information about a company's financial performance and position. Financial statements are used by various stakeholders to make informed decisions and assess the financial health of a business. Therefore, financial statements are considered a part of accounting rather than just bookkeeping.