Accounting services are important in any business regardless of its size, this is important because the company will have healthy finances when its expenditure and earning are controlled. Bookkeeping is additionally essential since it makes the organization legitimately consistent with the set laws and directions. Financial records are records of the financial related activities of the organization, the short term and long term financial position of the organization is always shown through this financial records.
Financial statements should be prepared by an individual with an education in accounting, they should have the necessary skills and knowledge in the preparation of the financial statements, and this will ensure that they will prepare accurate financial statements that will portray the true and Fairview of the company’s financial performance. These financial statements should also be prepared on a timely manner.
There are normally four types of financial statements an organization prepares and all have unique purpose but they are somehow related, these are; income statement, statement of financial position, statement of cash flows and statement of owners’ equity. The profit and loss account demonstrates the organization’s profitability amid a particular year; it sums all the income and deducts every one of the costs incurred amid the year. The income statement has four components these are; sales, cost of sales, gross profit and operating expenses. Click here to get started!
All the resources of an entity as well as the owners’ equity can be shown in the statement of financial position, it has key portions these are; asset where it exhibits the current assets and the non-current assets of the organization, there is liability section which exhibits the current and non-current liabilities of the organization, and it moreover has owners’ equity which shows what has been invested.
The statement of owner’s equity shows the progressions that have happened in the organization retained earnings over a specific timeframe. The statement of cash flows shows how changes in the balance sheet and the income statement will affect the cash and cash equivalents.
The reader of the financial statements should be able to read and understand them easily. The financial statements prepared by an organization are very important to different groups of people. The organizations will have the ability to know its financial position when the financial statements are prepared by the accountant. Stakeholders as well as shareholders will be able to know how the company will be performing when they review the financial statements. Investors doing their due diligence on the organization will know how it is performing by checking their financial statements , this will empower him settle on a choice on whether to invest on that organization or not. Get more information here!