Service Business is a business engaged in the service expertise. The examples of service business such as public accounting firms, beauty parlor, workshop, banks, insurance, educational institutions, schools, universities, doctors’ clinics, notary offices, leasing companies, hospitals, car rental companies, mail handling services, etc.
In conducting its activity, the service business also has transactional activities. The financial report for service business is different from the reports of trading business. The components to make the financial statements for service business are :
- Business name or other identity2.Financial statements coverage only one or multiple entities.3. The date or period covered by the financial statements
- Currency reporting.5. Numbers unit applied in the financial statements.
The financial statements for service companies that is presented by the end of period consist of income statement, capital change report, balance sheet, and cash flow statement.
- Income Statement
The income statement is a financial report shows the company revenues and expenses within an accounting period. The income statement is presented with various elements of financial performance required .
- Capital Statement
The capital changes report is the financial statements that tells the causes of changes in capital, from initial capital to ending capital within one period. The capital change report is indicated by the calculation between the initial capital of the period plus the net profit as stated in the income statement , then reduced by taking prive, to obtain the ownership capital by the end of the period.
- Balance Sheet
Balance Sheet is a financial report showing the financial condition or financial position of a company at the end of the period. The financial position consists of total assets, liabilities, and capital. Preparing the balance sheet should be sorted according to liquidity level.
- Statement of Cash Flows
Statements of cash flows are financial statements showing the incoming and outgoing cash . The statements of cash flows should report the cash flows over a certain period which can be classified according to operating, investing and financing activities. The purpose of activity classification is to provide information that enables report users to assess the company’s financial position as well as on the amount of cash.
- Cash Flows of Operating Activities. Cash flows from operating activities are primarily derived from corporate earnings. Therefore, the cash flows generally come from the transactions and other events that affect the determination of net profit or loss.
- Cash Flows of Investing Activities. Cash flows from investing activities reflect cash receipts and disbursements in respect of resources intended to generate future income and cash flows.
- Cash Flows from Financing Activities. Separate disclosure of cash flows due to financing activities is necessary to forecast the future cash flows by investors.
