Financial reporting of enterprises

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

When analyzing the financial environment, an enterprise needs a lot of information. This is necessary in order for the manager to make informed and reasonable decisions that affect the result of the organization's activities. Financial reporting is needed in order to analyze investment potential, make lending decisions, and also to identify the risk that is associated with cooperation with suppliers and customers.

At an enterprise, the accounting department usually deals with the analysis of the financial environment. Its employees collect, sort, summarize documents on commercial transactions. These include:

- sale of goods and provision of services;

- payroll distribution;

- stock purchase;

- others.

Financial reporting includes a summary of these data, their classification and generalization. Documents can be prepared every quarter, half a year or everyyear.

In accounting, an economic entity is considered as an organization that does not depend on the owner, purchased goods, sold products and paid wages. This distinction is very important for understanding what financial statements are and how they are prepared.

A private enterprise is usually run by a small number of participants who are solely responsible to themselves and responsible for the bankruptcy of their property.

Most often it is an individual entrepreneurship (IP). Quite often, "IP-shniks" ask themselves the question: do they need to keep accounting?

In practice, the financial statements of IP are formed thanks to systematized and documented information. It is compiled on the basis of accounting statements.

An open joint stock company (OJSC) is a corporation that is managed by management. It, in turn, reports to the board of directors, shareholders, control bodies, whose shares are publicly available (for sale).

Financial statements of JSC includes 2 parts: income statement and balance sheet. The latter represents the detailed state of the enterprise on a specific date (generally 31 December). But some organizations generate reports at the end of sales. Mostly those who work seasonally. Profit and loss statement is a detailed account of the expenditure of funds earned (lost)enterprise for a certain period of time.

A limited liability company (LLC) is a corporation established by one or more persons, liable to creditors only with its declared capital. Its size is determined by law.

The financial statements of an LLC are prepared by analogy with joint-stock companies. The profit and loss statement and the balance sheet of the enterprise compiled for a certain financial year are presented.

Comparing the organization's documentation for several periods in a row, you can identify upward or downward trends. Evaluation of reports, including detailed ones, can help the manager in making decisions. Comparative analysis with its previous results and averages is very important to characterize the financial condition of the enterprise.