Types of Company Financial Statements

Every company that is still operating and running a business, definitely has a company financial report. Without it, the company’s dynamics cannot be tracked, so that related parties such as investors, company owners, and employees within them do not know the general financial condition.

The company’s own financial statements can be understood as a form of document that can show the financial condition of a company in a certain period of time. Furthermore, this report will be compiled and made according to needs, and in accordance with reality.

Financial reports do not only present data regarding profit or loss, but many other financial conditions that exist within the company. Therefore, let’s take a look at some of the different types or types of financial reports that can be created within a company.

Types of Company Financial Statements

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In general, and the most widely used, there are at least five types of corporate financial statements. Starting from Profit and Loss Reports, Changes in Capital Reports, Balance Sheet Reports, Cash Flow Reports, and Notes to Financial Statements.

Each of these types of reports has its own purpose and information. Described in a more detailed explanation, in the next section:

1. Profit and Loss Report

The first report, as the name suggests, conveys data on the current condition of the company. Whether in a profit condition, or in a loss condition, everything is listed in the company’s financial statements on this one.

The points that must be entered are the amount of sales, the amount of HPP for the product, then the amount of income, up to the amount of expenses owned by the company. All of this data must be entered and calculated carefully, so that the income statement submitted can be comprehensive.

This report itself is divided into two broad categories, namely single step, which is easier to understand and produce because it clearly shows the difference between income and sales, then multiple step, which includes operational and non-operational variables in its preparation.

2. Report on Changes in Capital

For reports on changes in own capital in general, it will contain the conditions and dynamics of capital owned by a company. This is important, because the increase or decrease in capital will affect the fluctuations in profits or losses owned by the company.

Important information contained in the company’s financial statements includes the amount of initial capital owned by the company, then the amount of capital from the owner of the company, and the dynamics of the amount of capital over time.

You are also required to include information regarding dividends received by investors in this report. Directly, users of this report are investors and shareholders. Only then the owner and manager of the company as information that must be understood.

3. Balance Sheet Report

Also referred to as a balance sheet, which has information about assets, liabilities, and equity. This report contains the capital owned by the company (initial capital up to premium and disagio shares).

Clearly, the reader of the balance sheet report can find out the company’s financial condition in the period this report was made. For investors, it is also important to pay close attention to the balance sheet report in order to see the assets and capital owned by the company.

4. Statement of Cash Flows

In general, a cash flow statement to provide detailed information related to the company’s income and expenses. This includes all activities, both internal and external transactions carried out by the company.

Information that can be obtained is related to the company’s ability to obtain clear cash flows, investment transactions and cash funding, the company’s ability to pay salaries and dividends, to information related to the company’s net profit.

Two methods can be used in preparing the company’s financial statements. The first is the direct method, namely by referring to the cash book that is owned. The second is the indirect method, namely by looking at the cash elements from business activities, investments, to funding.

5. Notes to Financial Statements

The last type of company financial statements is notes to financial statements. Even though the four previous financial reports seem to have covered everything, this report is there to convey matters that have not been presented in the previous reports.

Notes to the financial statements themselves are usually made for companies that are already in the Tbk or public category.

In general, company financial reports, regardless of their type, contain important information regarding the financial condition of a company. Whether you are an owner, manager or investor in a company, you must pay attention to these reports, regarding progress, data validation, to the credibility of the process.

Conclusion

Those are the five types of company financial reports that you must understand. Of course, all of these reports can be prepared properly and are ideal when transactions that occur in a company are recorded systematically and the data is completely valid.

It is not uncommon for companies to entrust this matter to ERP service providers, who can integrate recording of financial affairs with other data, so that the cross-check process is easier to do.

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