A company can show the results of the work they have done in a certain period of time with the financial reports they produce and the types of financial reports they make each year. The data contained in the report can show how the financial condition of a company. Therefore, a financial report must be made in a clear, accurate, and structured manner so that the condition of the company can be thoroughly known.
Well, there are many types of financial statements? Before we answer what types of financial statements are, we should first understand what financial statements are.
What are Financial Statements?
Quoted from Katadata, financial statements are a recording and reporting of money and transactions they do. Usually, financial reports are made at a certain time according to the needs of the company, generally done once a year.
The Indonesian Accounting Association (IAI), an organization consisting of professional accountants that establishes and compiles a code of ethics and standards of practice for accountants in Indonesia, said that financial statements are part of the financial reporting process.
Complete financial statements usually include a balance sheet, income statement, statement of changes in financial position, notes and other reports and explanatory material that are an integral part of the financial statements.
Types of Financial Statements
1. Income Statement
The income statement is the accountant's main report in measuring the economic performance of a business, namely income minus expenses during a certain accounting period.
This type of financial report provides an overview of the company's operating results in a certain period. In the income statement, you can see the amount of revenue, sources of income, total expenses and the types of expenses that a company incurs in a given period.
The income statement shows the operating activities carried out by the company for a certain period. This report is used to evaluate the performance that has been achieved by the company and provide an overview of the achievement of cash flows in the future.
2. Balance Sheet
Balance sheet statements are usually made at certain times regarding the company's resources, its debts and claims to ownership of the resources. The balance sheet financial report serves to show the company's financial condition, starting from the position of the amount, type of activity or assets, liabilities or liabilities, and company equity.
The balance sheet contains useful data to provide a basis for financial data that can be used to calculate the company's rate of return. In addition, this data can evaluate the capital owned by the company, such as liquidity, solvency, and financial flexibility.
Read also: 7 Benefits of Financial Statements: Must Know!
3. Capital Change Report
The statement of changes in capital generally contains the amount and type of capital owned by a company. In addition, this report describes changes in capital and the reasons for these changes.
This report is referred to as a statement of changes in shareholder equity for a company with a limited liability company. The statement of changes in capital can identify the causes of changes in the owner's equity in the value of net assets or assets owned by the company.
4. Cash Flow Statement
Cash flow statement is a summary of cash receipts and payments from a company within a certain period of time.
This report shows the entry and exit of cash flows in the company. Cash inflows are income or loans from outside parties, and cash outflows are costs incurred by the company.
Cash flow statements can be divided into three groups:
- Operational Activities : namely all activities and transactions that are not included in an investment and company financing. This cash flow comes from operational activities such as production, distribution and service provision activities.
- Investment Activities : namely the return of merchandise inventory, purchase and collection of receivables, loan payments, procurement and sale of company equity and assets.
- Funding or Financing Activities : is the acquisition and granting of resources from and to owners from investments, borrowing, and repayment of debts.
5. Report Notes to Financial Statements
The last is the notes to the financial statements. This report explains the reasons why a financial report is prepared so that the cause is clear.
This is done so that readers of these reports are able to understand the financial data in the financial statements described above.
This is an explanation of financial statements and their types. Hopefully the above explanation can help you understand certain aspects of the activity of making financial reports along with the types commonly found in the corporate and business environment.
For financial reports that are personal, you may have difficulty recording all the income and expenses that you do for a month. But, don't worry! Whiz has an automatic recording feature that will make it very easy for you to record all the transactions you make.
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