Everyone who is engaged in business, production, provides services, earns money in other ways has to keep accounting records.
To understand all the nuances of this work, you need special training and constant access to changes in legislation.
Usually, an accountant is responsible for maintaining accounting records. When one specialist is not enough, an accounting department is organized.
Why do you need financial statements?
Financial statements are data that show the financial and property condition of an organization on a certain date. According to the forms of financial statements, you can check the cash flow in the period of interest, evaluate the performance of the organization and its financial condition as a whole.
Forms of financial statements are standardized, their content, the procedure for filling out and the time of delivery are established by law. They integrate information from all types of accounting so that it can be viewed in a format suitable for analysis.
Financial statements drawn up according to certain rules are necessary so that interested parties can evaluate the efficiency and transparency of the work of an enterprise or organization.
Accounting reports, in addition to managers and owners of companies, are of interest to investors, recipients of dividends, contractors and fiscal and auditing government agencies.
Types and forms of accounting
Types of financial statements, terms of preparation and submission of relevant documents are established at the legislative level. Accountants of all organizations are required to prepare:
- balance sheet;
- profit and loss statements.
Of course, this is not all the documents that accountants are involved in compiling.
Especially a lot of papers and forms of financial statements they have to prepare at the end of the year. To sum up the annual activity of the organization, you need to draw up:
- statements of changes in equity and cash flows;
- appendix to the balance sheet.
Explanatory notes, auditors’ reports, interim financial statements, and other documents may also be required to help explain to interested parties the origin and movement of assets and funds.
Why is professional help important?
Accounting and reporting helps to properly allocate funds, plan costs, and make purchases.
- work with taxes;
- are involved in budgeting, planning;
- prepare financial statements (the more the business scales, the more complicated the composition of the financial statements);
- help to calculate investments, prepare documentation for investors;
- prepare documentation for the payment of dividends, obtaining loans.
Proper preparation and maintenance of accounting records also saves money that can be collected as penalties for intentional or unintentional accounting errors.
Who needs financial statements?
Financial statements are required to be maintained by legal entities of different forms of ownership and activities:
- pharmaceutical industry enterprises;
- companies in the IT industry;
- Media and advertising business;
- organizations of the agricultural sector;
- construction companies;
- travel companies;
- delivery services;
- transport companies;
- public sector enterprises.
Financial reporting according to a simplified scheme is also carried out by individual entrepreneurs . It’s necessary:
- Management of the company, firm, organization. The data presented in the accounting reports show the actual state of affairs.
- Management decisions are based on them. They help to evaluate the effectiveness of the organization in the study period, show its financial stability. If the economic activity of the enterprise becomes inefficient, financial reports immediately show this.
- Persons interested in the results of the organization’s financial activities. These may be shareholders, employees, investors, contractors, suppliers or buyers, customers.
- Regulatory authorities. Most often it is the tax service, statistical offices, extra-budgetary funds.
So, accounting reports give stakeholders an idea of how efficiently and legally an organization, company or institution is operating.
Accounting allows you to optimize and plan costs, pay taxes correctly and on time, evaluate the attractiveness of a company as an investment object.
When it is unprofitable to keep your own accounting, it is advisable to use the services of an accountant for the submission and preparation of reports, which are provided by specialized organizations with a good reputation.
The desire of companies of any size, legal form and profile of activity to reduce operating and other costs has led to the development of the market for outsourcing accounting services. During the pandemic, these services have become especially relevant, so that today qualified professional activities in the format of trust management of finances and taxes, that is, accounting, have become commonplace.