The financial statement is very crucial. In the report, you will see whether your financial condition is on target or not. In fact, you could say this financial statement will be a benchmark whether your business is worth continuing or not. When a report looks positive, it could be a good sign for you to grow your business even bigger. But if it’s negative, you have to think again to determine and implement various new strategies. You can hire the services of Boyd Associates accountants who offer a complete range of accounting and financial services for businesses and individuals.
Not infrequently when your financial statements are negative, there are signs that something is wrong with your income and expenses. However, in many cases, this can also be caused by an error in recording financial statements. The reason is, in accounting, if something goes wrong, then almost all the numbers can become abysmally. Well, therefore, you should pay attention to the various types of errors that affect the following financial statement records.
Various types of errors that affect financial statement records:
Incorrect Estimated Calculation of Assets
In the recording of financial statements, calculation of assets or fixed assets often occurs frequently. For example, you write down the assets of buildings, vehicles, and other equipment that should have a value, but instead, you write “0”. This will be very influential when you write the balance sheet at the end of the year, especially if you have previously written down the value of assets. To avoid this mistake, you should review the monthly financial statements. Find out if there has been a change in the calculation of assets or fixed assets.
Decimal Writing Error
If you still use the manual recording, chances are that you will often encounter decimal writing errors in numbers. For example, suppose you want to write down 1,000,000, but it is wrong to be 10,000.00 and it will count as 10 million or 100,000. This is a fundamental error that will be very influential once in the financial statements. So, from now on you have to pay attention to writing decimals to avoid mistakes.
Incorrect Calculation of Current and Non-Current Liabilities
The next mistake in writing the financial statement notes is to distinguish between current liabilities and non-current liabilities. Current liabilities are short-term debt such as office rent or short-term investment debt of less than one year. Then, for non-current liabilities, it usually covers debts of more than two years. These non-current liabilities can be in the form of bonds, shares, or debt that must be paid in more than three years. If you are wrong in calculating current liabilities and non-current liabilities, this will make the financial statements become unbalanced.
The last mistake that often occurs in financial statement records is tax calculation. Many company owners do not know how to calculate the correct tax. So, instead of being confused, you can take 1-2 days to consult about how to calculate taxes properly. If you have an accounting person at the company, you just have to match for one month whether the calculation is correct.
The four mistakes above are very common. So, you try to pay attention to trivial things so that errors do not occur in recording accounting.