Questions About Services You Must Know the Answers To

Importance of Preparing Financial Statements 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 important because it makes the company legally compliant with the set laws and regulations. Financial statements are records of the financial activities of an entity; they provide an overview on the long-term and short-term financial condition of an organization. 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 difference between the incomes made during a specific period and the expenses incurred in that same period. The profit and loss account has four sections these are; revenue, cost of sales, gross profit and operating expenses.
Getting To The Point – 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.
The Ultimate Guide to Bookkeeping
Changes occurring in the retained earnings of a company over a period of time can be shown in the statement of owner’s equity. 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. People from different walks of life will use the financial statements prepared by the organization. The company will have the capacity to know its monetary position when the financial statements are prepared. Partners and also investors will have the capacity to know how the organization will be performing when they review the financial statements prepared. Investors doing their due diligence on the organization will know how it is performing by checking their financial statements , this will empower him settle on a choice on whether to invest on that organization or not.