Written statement for court template, All organizations, whether public, private, or non-profit, have to prepare financial statements on their performance to present fiscal accountability and accuracy for their stakeholders and individuals with an interest in the business. These statements allow management to generate business decisions, enable creditors to assess loan programs, and provide people with information to generate investment choices.
A company’s income statement may also be called the P&L (Gain and Loss) and Statement of Operations. The income statement shows revenue earned (the best line) from the sales of merchandise and services before expenses are taken out, is transformed into the web income (bottom line), the end result after revenue and expenditures are accounted for. The earnings statement documents whether the firm made a profit or not during a documented period of time.
The balance sheet, also referred to as statement of financial position, is a overview of a provider’s balances as of a particular date, generally the final day of this financial year. The balance sheet consists of three parts: assets, obligations, and possession equity or net worth, together with resources in 1 segment and liabilities and net worth in the other, with the two departments balancing. The gap between assets and liabilities is a firm’s net worth or equity. A provider’s assets also equal their liabilities and owner’s equity, which may show how the resources were funded, either by borrowing cash (liability) or employing the proprietor’s money (owner equity).
The statement of cash flows shows how changes in the balance sheet and income statement impact cash and cash equivalents. In addition, it demonstrates operating, investing, and financing activities. The statement of cash flows aids investors and management determine the short term viability of a company, especially their ability to cover expenses. As a CPA I analyze these 3 financial statements along with their supporting documentation provided by the business and assesses the overall accounting principles utilized. From this info I then create an audited financial statement which will incorporate an impression, either qualified or unqualified, concerning the essence of the financial records.
In composed financial statements, the organization, not the accountant, is responsible for its accuracy and completeness of the financial records. Since the statements were not audited or examined, they aren’t certified by a Certified Public Accountant (CPA). No opinion or assurance is expressed in the accounts regarding whether the accumulated statements are free of material misstatements or false/missing data or if they’re found to be true, complete and fairly presented to satisfy the needs of the US GAAP (Generally Accepted Accounting Principles).