Financial statements and principles of their preparation

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

Accounting statements are a collection of information about the results of the economic activity of an institution for a certain period of time and about its material and property condition. The regulatory system represents a set of indicators that reflect the position of the organization at the reporting date and the financial results obtained as a result of its activities for the reporting period. It received the appropriate name, since during this time the institution must draw up accounting financial statements. This procedure, first of all, is necessary for the organization.

The generalization of accounting information is associated with the need to clarify or adjust the course of economic activity. In this regard, the accounting financial statements should reveal details that, by their content, may in any way affect the assessment made by users of information about profit, loss, general financial situation or condition.property. The consumers of this data are the owners, founders or managers of the enterprise. Accounting financial statements on the performance of the institution, the level of financial stability and property status are quite significant for those investors who are interested in investing capital. Each commercial enterprise must also have constituent documents established by the owner.

The accounting financial statements have a special principle of compilation and publication. Its value lies in cost-effectiveness, timeliness, reliability, in accordance with the established procedure for registration, integrity and publicity. Changes in accounting policies are required at the beginning of the financial year to maintain comparability. If they are absent, then such accounting and financial statements need to be adjusted, during which it is necessary to adhere to the provisions established by the accounting regulatory system. Methodological indicators should be uniform. The reasons for and specifics of the adjustment should be explained in the relevant note to the income statement and balance sheet.

Financial statements contain: information on profit and loss, balance sheet, audit report, explanatory note and annexes. When compiling it, you must adhere to some rules. First of all, it should be remembered that data on financial results andposition of the enterprise must be reliable and provided in full. In the process of preparing financial statements, one should adhere to neutrality, because they are required to be prepared in the interests of all users. In addition, it is important to observe the sequence of content and forms. The accounting financial statements are confirmed by the auditor's report.