Comprehensive Guide For The Preparation Of Financial Statement Reports

 

For the effective movement of any organization either small or big firms, preparation of financial statements report are necessary to fulfill the organizational demands of any structure. Small firms also follow the same structure but on small scale in order to have proper knowledge of company’s performance. Cash flow management for small businesses can easily be manage by maintaining a financial reports on quarterly basis, as it will also help in sustaining good performance of the company.

Usually the companies look forward to hire in-house employees for the purpose of making financial statements but some of the small scale industries who are limited on the budget often look for the out-sourced professionals to create the financial statement for the year. If you are looking for some of the guiding principles of preparation of one. Here some important guidelines for the preparation of financial statement reports to have easy and meaningful information with surprising presentation. 

To make the financial sheets some meaningful figures are needed in the specific column to know the actual and final results that are:

CLOSING PERIOD:

For the ease of work and especially for small organization financial reports should be released on quarterly basis which means four reports annually and with the forth report it can be stated as annual report also. Edge of doing this work will reflect each and every pros and cons of the institution, also one can go for monthly reports to be more precise regarding the performance of the business.

Most of the large scale organization prepare a mini closing period statement at the end of the month to measure the performance of its organization and its employees. If anyone is performing on lower scale than it should be made to work harder. If any part of the organization requires a little back up they should also be granted with those.

For other firms who go for the closing period for six months they would like to measure the profit and losses of the company incurred after six months to access their performance.

REVENUE CALCULATION:

Another basic inventory column is of revenue sales that how much money has been generated for this particular period. Even if anyone going for monthly accounts results which is hard enough for the businesses to have complete amount of sales in the closing time should also list down in revenue with any mark.

PRODUCT COST:

Once revenue is listed after that cost of the product should be mentioned in which add up total cost of the good or anything else which has been sold including material, overhead expenses etc. subtracting the cost amount from the revenue will give a result that will show gross margin of the sold product. Marking the product cost of the sales is another important factor in evaluating the performance of the company and its employees. It also helps you to judge whether the total cost of the product is causing any negative or positive impact on the total revenue generated by the company.  

OPERATIONAL EXPENSES:

This can be excluded for small firms and can also be added directly into sold expenses furthermore selling and administrative expenses are add up in this. Income statement can be availed directly by subtracting these expenses from margin directly. Past it’s solely on the accountant or related one that in which direction they may proceed. 

EARNINGS BEFORE TAXATION:

Earnings before tax should be displayed in the sheets to acquire the satisfaction of the shareholders or investors of the company. Aims are set by authorities for the required period and all the efforts are then assigned for that target. 

This also serves as the best part of the sheet as it shows you the ground workings of the company and serves out to put forward a happy picture for all those who are interested in the profit sharing of the organization.

 

TAXATION OF PARTICULAR COUNTRY:

Every state has its own tax rates for the income generated through different businesses. Simply multiply that percentage from the income to have your net profit. Also this will help during tax file of income statement then company will have advantages accordingly from the state.

NET PROFIT:

Simply just subtract the taxation amount from the earnings; it will give the net profit one has gained for the defined period. 

EPS AND DIVIDENDS:

Earnings per share had better impact on the papers as it reflects the performance in just seconds. Dividends are the amount transferred to the shareholder from the esp., usually small chunk being extracted from the esp. and remaining amount would be reinvested in the business and can be used for expansion.

Next time, when you look forward to prepare the financial statement of the year one should try and follow all those mentioned steps in the above article to be able to gather the correct earnings of the organization.