Every business owner needs an accurate financial information to describe his business condition. Whether his business get stuck, going up, or even loss. It is the base to consider the things to manage the business, develop the business, and expanding. One of the base to make business decision is financial statement.
What is financial statement?
Financial statement is the report tells the valid financial data to concerned parties.
Based on the Financial Accounting Standard, the purposes of financial record are:
- Giving information related to financial position, performance, and business financial changes and bring benefit to the users in decision making.
- To meet the shared needs of most information users including information availability that users may need to take general decision making which describes the financial impact of previous period.
Who are the financial statement users?
The financial statements are required by concerned parties related to business performance such as shareholder, directors, investors, government, and others. The users are divided into two types, internal and external parties.
- Internal party
Internal parties are those who directly related with day-to-day company operations, such as managers. Managers as the business superintendent has the responsibility to monitor the business activity. The amount of data as managers needs depend on the business size. Managers require this information to evaluate the business activity.
- External party
External party is an interested parties to the companies but not directly involved in decision making and operational policies. External parties include investors, creditors, government, employees, public, etc.
The financial statement tells the business financial condition and performance in certain period. There are several reports known as Profit loss, balance sheet, cash flow statement, etc.
Profit loss report is the overview of the income and expenses in specified period. In other words, the reports describe the received result in certain periods and cost occurred to obtain it. The income minus expenses will result in profit or loss. If income is greater than expenses means profit and vice versa.
Balance sheet is the report describes the company’s financial position in certain period, which describe the asset, payable, and capital positions.
The cash flow statement is the financial statement that presents the amount of incoming cash and outgoing cash during specified period.
In addition to the financial report for electronic store, some supporting reports are: inventory report, sold items report, payable, etc. Most of electronic store uses serial number facility to to check the incoming and outgoing goods in accordance with each serial number. It helps to prevent from exchanged items and deals with goods warranty as part of after sales services.
