Getting To The Point – Bookkeeping

The Types of Financial Statements Prepared Accounting services are important in any business regardless of its size, this is important because the company will have healthy finances when its expenditure and earning are controlled. Accounting is also basic since it makes the organization comply with the set laws and regulations. Financial records are records of the financial related activities of the organization, the short term and long term financial position of the organization is always shown through this financial records. All the financial statements prepared should portray a true and fair view of the actual financial position of an entity, these statements that are true can only be prepared by an individual who has undergone training in accounting and has acquired all the necessary skills and experience in preparing the financial statements. These financial statements ought to likewise be prepared at the right time and when they are required. There are normally four types of financial statements an organization prepares and all have unique purpose but they are somehow related, these are; income statement, statement of financial position, statement of cash flows and statement of owners’ equity. The income statement shows the company’s profitability during a specific year, it adds all the revenue and deducts all the expenses incurred during the year. The profit and loss account has four sections these are; revenue, cost of sales, gross profit and operating expenses.
The Ultimate Guide to Bookkeeping
The statement of financial position shows all the resources of an entity as well as owners’ equity of a specific period of time, it has key components these are; asset where it shows the current assets and the non-current assets of the entity, there is liability which shows the current and non-current liabilities of the company, and it also has owners’ equity which represents what the stockholders have invested.
Finding Ways To Keep Up With Bookkeeping
The statement of owners’ equity shows the changes that have occurred in the company retained earnings over a certain period of time. The statement of cash flows shows cash and cash equivalents that are caused by changes in the balance sheet and profit and loss account. The reader of the financial statements should be able to read and understand them easily. Financial statements prepared by an organization are very important to people that have an interest in the organization. The company will have the capacity to know its monetary position when the financial statements are prepared. A Company’s performance can be evaluated by looking at its financial statements, shareholders and stakeholders will always examine the financial statements of the company to determine its performance. Investors conducting due diligence on the company will know how it is operating by checking their financial statements, this will enable him make a decision on whether to invest on that company or not.