The financial statements become important for every business because it describes the concrete condition of the business finance. Both the small and large businesses, must make a financial statement.
This is why many undergraduate accounting concentrations are required by the business sector. Financial statements tend to be complicated and should be done by experts. Certainly as a boss, certainly do not want to receive the financial statements are perfunctory.
Some business owners still have not implemented the business financial management system properly. This is because they are still using the money from the sale of their business for their personal needs, before the creation of financial statements.
Moreover, not keep the receipt of the shopping so that makes the fog about how much money has been spent for a business needs. Thus, financial statements are very important. In this article will explain what kind of financial statements should be in your business.
1. Profit and Loss Statement
The income statement is the first type of report that should be in the company. With this report, you can know the performance of the business in a certain period. This report usually contains tax expense, minority interest, income aspect, and so forth which has been established by the Indonesian Institute of Accountants.
This report allows you to reflect on the capital that can be used for your future business needs in the future. This report can explain how many losses were gained during that period.
The disadvantage may be the result of comparison with previous sales achievement. In addition, it can also compare expenses with previous periods.
2. Balance Sheet Report
In addition to the income statement, you should also pay attention to the balance sheet. The balance sheet report is a report that can explain the balance of transactions that occurred during the related period. In the balance sheet report should contain assets, liabilities, and equity. In the world of accounting, assets are the sum of liability and equity.
In addition, if you want to know the debt business, you can use the balance sheet report to see it. That way, get an idea of your business status whether it is better or worse than before.
3. Cash Flow Report
The cash flow report is commonly known as cash flow statement. This report details transactions that are outward costs and costs that go into the business finance. With this report, it is possible to assess the cash flows of the previous period as they are all recorded in this report. In addition, this report can also serve as an indicator of financial planning in the next period because you can basically evaluate any transactions that have occurred in the previous period.
4. Capital Changes Report
Every business would expect to spend less capital than the previous period. However, there is still a possibility to be issued more capital than previous capital, Therefore, before preparing the financial statements of capital, must be completed first profit loss statement.
With the income statement, can help an attempt to detect whether there is a gain or just a loss. After that a report of capital changes was prepared.
Furthermore, the company can analyze what exactly causes the capital to multiply. Whether errors occur in raw materials, workers’ comfort levels, or worker competence or so forth.
If indeed there is depreciation of capital, then sought the cause so considered to be re-done for capital in the next period can be reduced as well.
Do not Miss the Preparation of Financial Statements in Each Period
Prepare financial statements in each accounting period. You can hire an expert to manage it or use software. The three types of financial statements above can be used for financial reflection in the future. In addition, it can also be used as a form of accountability regarding the results of business work in the related period.
The investors will also collect it as a form of responsibility in managing the business. Investors certainly want clear results listed in the financial statements.