Financial Statement Preparation

financial statement preparation

Financial Statement Preparation for Growth

It is beneficial beyond your thoughts

Whenever we talk about the financial statement preparation, our mind starts thinking about the tax. It is filing of tax returns. However, this perception is not correct. A financial statement is beneficial beyond the common understanding that we have about a matter of fact that most people think it is a kind of statement that has nothing to do with anything else than it. However, it is not true, as it is one of the most useful analytical instruments. In fact, a properly managed and supervised financial statement preparation process can end up in very useful documents to pilot your business activities.

Types of Financial Statements

There are four types of financial statements, which are prepared in a same manner across the world. It means that the structure and basis of financial statements remain same wherever you go. Here it is also important to mention that it is something general and does not change from business to business. In case if you are running a manufacturing business or a nonprofit organization you can have similar kind of financial statements that are used by a business operating to provide certain services.

There are total four kinds of such statements that we see today. Each one of them is different from the three others as it supplies focused insights on a particular aspect. Here are the names of these statements along with a brief introduction,

  • Balance sheet

The statement covering information related to the assets, liabilities and capital of a company at a preselected point in time

  • Income Statement

This kind of statement deals with the revenue or income only that a company or organization managed to earn within a selected period

  • Statement of retained earnings

This statement gives details about the retained or possessed earnings from net profit, loss or dividends (if paid)

  • Statement of cash flows

The statement that provides detailed information about inflow or outflow of cash caused by different activities like for operations, investments or elevating capital

Advantages of Financial Statements

As we have mentioned above, there are several benefits of financial statements. Let us briefly discuss a few of their advantages here,

Make Timely Decisions

Financial statements are great analytical instruments as well. With the help of an updated statement, you can make perfect decisions for your business. When it comes to the forecasting and planning, one or all of the primary statements can provide you with a reliable platform to see the actual picture.

It is an Obligation

Every kind of business operates under the laws. Financial statement preparation becomes a compulsion in several scenarios. In case if your business model includes shareholders and their money then it is necessary for you to do. Similarly, it is also required in the process of tax returns filing.

Inhibit Fraud

Who don’t know about the possibility of frauds and malpractices in financial matters? The financial statements tend to show you the details of everything happening out there. Therefore, by using these statements you can inhibit the possibility of frauds within your organization.

Professional Support

The process of financial statement preparation involves higher-level expertise. Several businesses cannot afford qualified and certified accountants. If you are running a small business and do not have appropriate human resources available, then do not worry. You can easily mitigate this issue by acquiring a professional`support. Luckily, there are several excellent firms and individuals operating in the market to extend this kind of support to their customers. In fact going to a professional is a better option as it will keep your financial statement preparation error free. Remember that a poorly built statement can bring devastating impact on your business.

Don’t Forget

Before finally hiring a professional, do not forget to check his background. In case if, you have decided to go with the option of hiring a specialized firm than do not forget to check their BBB rating. In addition to this, you should also confirm their previous experienced in financial statement preparation.

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