Sunday 23 December 2018

Financial statements

A financial Statements are written reports that quantify the financial strength, performance and liquidity of a company. It will contain the cash flow statement, the income statement and the balance sheet of the business. For the parties concern towards positions and financial condition, in dire need of financial information may be obtain from the financial reports.

Financial statementsThe information is comply and present in the form of company balance sheets the report profit and loss, report changes in capital and cash flow statement. The information require by the parties that went public in his preparation to conduct a public offering because one of the conditions the companies that go public are should submit their financial reports for the past two years already review by the public accountant.

Every company has a financial report which aims at providing information concerning. The financial position, performance and changes in financial position of an enterprise. That is useful to a large number of users of the financial statements in making decisions in economics.


The financial statements must be prepare on a periodic basis to the parties concern. Understanding financial statements. The financial report is a summary of a process of recording financial transactions. That occur during the two years of the book in question. Financial report is a report that describes the results of the process of accounting. That is use as a tool of communication to parties with an interest in financial data or activity the company.

Whereas the definition of the financial reports.  Financial reporting is essentially a result of the accounting process that can be use as a tool to communicate the financial data or activity of an enterprise.

Financial reports can be infer is the main accounting reports to communicate financial information. To the parties concern, as a material consideration in economic decision making.

Basis of financial statements

The financial statements of the company are base on accounting rules and must provide basic quantitative historical information. Which is a collection of important input use in calculating economic values.

The financial statements consist of:

  • The income statement IE report on earnings, expenses, profit and loss obtain an enterprise during a certain period.

  • Balance sheet, namely a report on assets, debt and capital of the company at a given moment.

Assets, divide into two are:

  • Long term, i.e. a period of more than 1 year

  • Short term, i.e. a period of 1 year or less than 1 year.

Debt can be classify into:

  • Guaranteed full, creditors are give the guarantee of equal to or more than the magnitude of the debt.

  • The guaranteed portion, creditors are given the guarantee less than the magnitude of debt.

  • Creditors are not secure, the creditors who are not gives a guarantee in the form of certain goods.

Report the cumulative list that is withheld profit came from previous years. The current year are not distribute as dividends.  The cash flow statement shows the company's operating, investing, and financing cash flow.

Elements of Financial statement

Financial statements in the balance sheet and the profit and loss calculation all the information contained in the attachments-attachments among others report the source and use of funds (cash flow statement).

The financial reporting is to provide information about financial position, performance and cash flow in the decision-making economy.

The definition of it can be concluded that the financial report is the end result of accounting balance processes, calculation of profit loss, report change of financial position and record of the top financial which consists of:

 1. Balance sheet

The balance sheet is a financial report that its balance sheet shows the financial state of a company at a time. In the balance sheet listed the amount of wealth, the amount of debt and own capital of a company, and the amount of wealth seen on reports of assets consisting of current assets, fixed assets and intangible assets. While the debt and private equity looks at liabilities consisting of debt, long-term debt and capital on its own.

2. Profit loss Report

The company's profit loss report not all important financial information listed in the balance sheet. In the balance sheet contained no information about income and expenses from a company. The report can provide information about income and expenses called a financial report.

The reports profit loss calculations are the calculations of profit loss report is a report on the business results of the company or the company recognized expenses income during a given period. 

In accordance with the definition of the above it was concluded that the income is obtained in return with respect to the granting of loans or granting in other forms, such as the grant in the form of natural. Whereas the definition of cost is all expenditure-expenditure incurred by the company either spending-spending to acquire an asset or  because the granting of facilities-facility to another.
The cost of many kinds, among others, the cost of electricity, telephone charges, transport costs, travel costs and more cost to the other.

3. The report of the company towards financial position

Financial position report or reports, or the flow of funds report also referred to the source and use of funds can be included as a complement in the report.
As for the purpose of the report the company's financial position was primarily is to provide information on changes in current assets and debts. So the point of this report is on the sources and uses of capital for a period.

Whereas the definition of debt is the economical sacrifice required of the company, in the future in the form of surrender of the property or the granting of services caused by transactions in the period before,
for example trade debt, debt bonds, bail from subscriptions and others.

The types of debt is as follows:


Debt short-term debt or smoothly is a transmission debts will require resources that are classified in current assets or by incurring a new debt which consists of:
  • Trade Debt, i.e., debts arising from purchase of goods-merchandise/services.
  • Debt money order, i.e. debts that wearing of written evidence in the form of the ability to pay on a certain date.
  • Estimates of tax money, that is the amount of income tax that profit for the period used is concerned.
  • Debt costs, i.e. costs that have become a burden but not yet paid, for example, the salary debt debt interest and others.
  • Other debts to be paid within 12 months.


Long term Debt used to indicate the transmission debts will be done in time more than one year or will be repaid from sources that are not from the Group's current assets.

The debt includes debt long-term debt i.e. bonds, debt money long-term, debt mortgages, down payment from affiliate companies, debt long-term bank credits and others. Long-term debt usually arises due to the need for additional funds for the purchase of fixed assets, the number of permanent working capital play, buy other companies or to pay off other debts.


Other debts, such as debt bonds will be maturing but will be repaid from funds repayment of long term debt bonds, to officials of the company or to its subsidiaries and others.

As for the definition of capital is part of the property rights of the company in general capital consists of capital owners, top companies such as venture capital. 

4. The calculation of the profit and loss statement 

The calculation of the profit loss report is a report on the results of the company's business or income and expense recognized the company for a certain period.

Earnings are the rewards obtained with respect to the grant in the form of another.

It was many kinds, among others, the cost of electricity, telephone charges, transport costs travel costs and more cost to the other.

5. Change of financial position Report 

Reports a change to this report or the financial position of the flow of funds, or also called the report the source and use of funds may be intended as a complement in the financial statements of the company.

The purpose of the report from this financial position reports primarily is to provide information on changes in current assets and debts.

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