Know what are some of the important characteristics of financial statements before you make them. The following explanation will be described by the Mekari Journal Blog.
Financial statements are a form of corporate responsibility to its stakeholders.
Financial statements are records of financial information of an entity that can describe the performance of the entity in an accounting period.
Financial reports are made to provide information about the company’s performance and are useful for making business decisions.
In addition, the financial statements also show the form of transparency and accountability of the company/entity/organization to the public.
The company’s financial statements are prepared at the end of each accounting period or cycle.
Each company has a different accounting period. It can be for 1 year, or every 6 months depending on the policy of each company.
Reports are usually created manually or using financial reporting software.
Financial statements help assess a company’s performance during an accounting period.
In addition, financial statements also help companies to determine the company’s next steps.
Characteristics in Financial Statements
In general, there are four mandatory financial statements made by companies, both manufacturing companies and other types of companies, namely income statements, changes in capital, balance sheets, and cash flow statements.
However, the financial reports that are made are not just made
The basic characteristics that must be met in a financial report are as follows.
Relevant means that the financial statements in it must contain information that can influence users’ decisions by helping them evaluate past or present events and can predict the future.
Relevant financial statements are financial statements that record every business transaction during an accounting period.
In order for the information in the resulting financial statements to be reliable reliable, the characteristics of the presentation of information in the financial statements must be based on applicable regulations or guidelines.
In addition, the financial statements are also presented in a comprehensive manner.
As we know, information in financial statements must be free from misleading understanding and material errors, present information honestly, and can be verified.
So that relevant information alone is not enough because it is not reliable. If so, the information contained in the financial statements can be misleading and detrimental to users of financial statements.
You need to know that the next characteristics of the financial statements that are made must also be compared with other companies. This will be useful for assessing your company.
To be able to be compared with other companies, the basic accounting principles, systems, guidelines, and policies used must be the same
In addition to comparing with other companies, financial statements can also be compared between years.
To compare between years, the presentation of the company’s financial statements must be presented in at least two periods.
Read also about financial analysis and its functions.
Financial statements must also have qualitative characteristics that are understandable. The scope of this understanding is the general user.
Not only by the management, but the people who want to know can understand.
Information in financial statements is said to be understandable if all users understand and understand the content or information contained in the financial statements.
Thus, one of the benefits of making financial statements is that it helps in making decisions.
To make it easier to make financial reports that can be compared, financial statements must be made based on generally accepted guidelines and standards.
The contents of the company’s financial statements are balance sheets, profit/loss reports, changes in capital reports, and cash flow statements.
Each report is recorded from the transactions made by the company during an accounting period.
The calculation of these financial statements should not be arbitrary.
Because the company’s financial statements are very important to know the company’s performance and determine the company’s next steps.
Even for medium and small businesses such as SMEs, it is very important to understand how to make these financial reports.
Because the financial statements can be calculated from profits earned to losses experienced.
Now you don’t have to worry about making financial reports.
Financial reports can now be made more easily, practically, and efficiently if you use the help of online accounting software Journals.
Many features are provided in it that can make it easier for you to prepare financial reports.
Simply enter your business financial information and data, the Journal as a financial accounting application will calculate it automatically.
Moreover, the Journal is also based on cloud technology so you can access it anytime and anywhere in real-time. You can see more information about the Journal here.
Those are some of the characteristics that can generally be found in financial statements. May be useful!