Financial Statements Will Help You Develop Company

After successfully accumulating capital you now succeed to realize the ideas and innovations you have into a business. Business was established. The next step is to think about how you will bring the business growing. Of course in this case, there are many things you should do. In general, you will begin marketing activities to introduce your product to the community.

However, there is one more thing that is not less important than that, namely financial management. Even if you are proficient in marketing so you can earn a big income, but it does not matter if you are less skilled in managing corporate finance. Therefore, you need the science of accounting or hiring an accountant to be able to make financial statements. For those of you who are interested in learning to make financial statements, must first know the types of financial statements.

Balance Sheet Report

The first type you should know is the balance sheet report. A balance sheet report in English is also called a balance sheet. As the name implies, this balance sheet shows the financial balance of your company. Balance sheet reports are made during a specific accounting period showing two main types of information. Through the balance sheet report, you can know the condition of the source of the entity’s wealth as well as the source of the financing to acquire the entity’s wealth.

In the balance sheet report, there are three major elements that you must understand first, namely assets, liabilities, and equity. Assets are an economic resource that can provide benefits to the company in the future. While liabilities are the opposite of assets, ie debt on the other side that must be repaid. In the balance sheet report, the amount of assets held must be in balance with the result of the amount between liabilities and equity or stock.

Cash flow statement

Arguably, this type of report is very important because it can be a guide for business owners in running their business. The cash flow statement in accounting is known as cash flow. Cash flow contains a report that shows the amount of income and expenditure to carry out the day-to-day operations of the company.

So, all the transactions you make that either add to the company’s wealth or that reduce the earnings of the company should be recorded in this cash flow as well as the date. Tips you can do is, you should not throw away receipts, notes, receipts, and evidence of other transactions so that when made cash flow, you can easily enter the number.

The making of this cash flow statement is based on the resulting calculations on the balance sheet. Through the cash flow statement, you become aware of the change in your business wealth and can estimate the cash flow conditions for the accounting period thereafter.

Statement of changes in capital

In setting up a business you wear a capital name. As the business is running, then the capital you have will change. Therefore, you also need to prepare a report on capital changes. The change in capital report will give you information on how much of an increase or decrease in capital during the current accounting period. There are times when some business owners use their personal money as capital. As time goes by, to find out whether the profit has gone back to capital then it is necessary to calculate the report of this capital change.

Income statement

The Income Statement is at the heart of a series of financial statements you make. In general the purpose of business is to make a profit, is not it? Therefore you really need to prepare this income statement. The income statement will tell you whether the business is running as expected or not.

If the business has profits, it will certainly be profitable for you because it can save or be used as an investment or other things for the development of the company. Conversely, if it turns out that your business is losing out then you should find out what the cause and how the right solution. So, from here you understand how important this one financial statement.

By knowing each type of report and its function, now you can better understand and have an overview in working on financial statements. Because financial statements play a very important role in developing your business, then the manufacture must be correct so that the results given are also valid. If you are in doubt, you can see many examples on the internet and the guidelines in making each report well and correctly.

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