Getting Down To Basics with Bookkeeping

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Benefits of Preparing Financial Statements to an Organization 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 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 should also be prepared on a timely manner. 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 income statement has four components these are; sales, cost of sales, gross profit and operating expenses.
The Ultimate Guide to Bookkeeping
The balance sheet demonstrates every one of the assets of an organization and owners’ equity of a particular timeframe, it has key segments these are; assets where it includes the currents assets and the non-current assets of the company, there is liability which shows the current and non-current liabilities of the organization, and it additionally has owners’ equity which represents what the investors have contributed.
Getting To The Point – 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 organization will be able to know its financial 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. An investor will always know if he is going to invest in the company if he looks at the financial statements a company when he is conducting his due diligence.