In large scale companies, financial statements have been run in such a neat way by an accountant. Because the report does not only function to calculate income. However, it also functions as a source of information for making policies in facing business competition. Also, at the same time as evidence of accountability in tax returns. In small and medium scale businesses, financial statements are also very necessary if indeed the business owner wants the managed businesses to continue to develop and have a clear direction.
Keep in mind to make your financial statements cannot be separated from the science of accounting. Therefore, you need to be really careful in choosing the best accountant for your company. You can find it at lokalerevisorer.dk. You also need to understand a little about the accounting cycle and some terms in accounting. It sounds complicated, but you don’t need to worry. Because these terms will not make you dizzy if only to make simple financial statements.
Because studying the accounting cycle, the time required is not short. We will not discuss many things about accounting here, but only accounting principles are used to simulate these financial statements. Simply based on its activities, the accounting cycle contains several activities, namely recording, classification, summarizing, and financial statements.
Types of Financial Statements
- Balance Sheet
In principle, the balance sheet is intended to determine the financial position of a company or business in a certain period. The balance sheet is part of the financial statements that are made once a year. A balance sheet is needed to find out the value of a company after carrying out various activities related to finance. In essence, the value of a company may increase or decrease after a variety of transactions.
The balance sheet has several elements that can be broadly divided into three: assets, liabilities, and capital. Assets are all assets owned by a company, consisting of current assets, fixed assets, and intangible assets, such as trademarks, patents, and so forth. While liabilities can include current debt and long-term debt. Capital is the difference between the two assets, after deducting debt.
- Income Statement
In accordance with the term, the profit/loss statement contains a report on the difference in income after deducting costs or expenses. The profit/loss statement can be used to take policy or as a basis for measurements such as to measure the rate of return on investment or earnings per share.
- Statement of Changes in Equity
Equity in accounting can be interpreted as the capital or wealth of an entity. Entities here can be companies, shops, and so on. Equity is obtained from the difference in the number of assets (assets) after deducting liabilities (liabilities). A statement of changes in equity means a report that contains all changes to equity for a period.
- Cash Flow Statement
The cash flow statement contains all information relating to cash in and out within a specified period. Because it relates to the time of recording, the cash flow statement also applies as a condition to the historical changes in cash information.
- Notes to the Financial Statements
Notebooks on financial statements are needed as a place to record additional information on the financial statements. The explanation in the note can be narrative or detailed in the amount and other information.