A financial statement is a result of a company’s performance or activity within a specified period and the basis for decision-making. That’s why company’s financial statements reflects the business identity.
Starting the business and expand it to make it bigger is the challenge of every businessman has to face. From small to large-scaled business, from local to global. While the core of every running business is the company’s productivity. Then how the management recognize the business productivity runs well? Obviously, the financial statement will tell everything about it.
Why a financial statement is required? Where do the financial statements come from? Can the journal be a financial report? All these questions already have the answers. Let us explain how the financial statements presented.
In accounting, every process has been determined in the accounting cycle. The accounting cycle consists of transaction receipt, general journal, general ledger, trial balance, adjustment journal, trial balance after adjustment, financial statement, closing journal, and reversing journal.
The Statement of Financial Accounting Standards 1 (PSAK) regulates the presentation of financial statements. Do you know what are the complete components in the company’s financial statements? According to PSAK 1, the components of the financial statements are:
1.Financial position report
This report is also known as the balance sheet report. Is it the same as the balance sheet? Yes, indeed it is the same. Changes in SFAS 1 in 2009 are to change the balance sheet report into a statement of financial position. This statement of financial position informs the position of assets (assets), liabilities (liability) and capital (equity) of the company. Company assets that generally contain cash, bank, accounts receivable, inventory, prepaid expenses, vehicles, buildings and others. Generally, written assets start from the most liquid to the intangible. Debts that are generally reported in the financial position (balance sheet), namely short-term debt and long-term debt. While the capital component that contains the initial capital of the company, changes in capital and prive (if any).
- Comprehensive Income and Other Income Statement
In PSAK 1 in 2013 this report changed into income statement and other comprehensive income. This report describes the position of costs subjected to the company and the revenue received . The income statement describes all the parts related to sales ie, returns, cost of production (), operational costs, such as electricity costs, telephone costs, and non-operational costs. This report will explain how your company gets the turnover and your business is experiencing profit or loss.
- Statement of Changes in Equity
Well, these equity change reports have not changed the name as the two previous reports. As the title suggests, the change in equity statements describes the owner’s capital movement. This change usually occurs due to the effect of the profit loss statement. If the company achieve its profit, then the company capital will also increase. On the other hand, if any loss occurred, the company’s capital will decrease. Moreover if the business owner takes prive (personal take) will also influence the existing company capital.
- Cash flow report
These financial statements represent the company’s cash flow in financing, operating and investment activities. Each of these activities has different transactions from each other. For example, purchase goods using cash will influence the cash flow statement from production activities.
- Financial Statements Notes
This report serves as an additional information record that complement the previous 4 financial reports. Usually notes on these financial statements also inform the company’s sustainability, debt and accounts receivable and contingent liabilities.
Well, it can be concluded that the financial statements is an important component in a company. One of the aim is to help the management to make business decisions. Therefore, the company’s financial statements reflects business identity. These reports are prepared periodically, means the business financial reports are made regularly. Using accounting software to complete the financial statement is the best option. Like Zahir Accounting which already proven to facilitate the businessman in making the company’s financial statements. Whatever your type of business, your accounting software should be able to create financial reports automatically.
