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6 Easy Ways to Make Financial Statement for Beginners

6 Easy Ways to Make Financial Statement for Beginners

One form of corporate responsibility to stakeholders is making financial reports. Both for companies on a large scale and on a small scale, financial statements are an obligation that must be made in each period.


Financial statements are the heart of a company. As an entrepreneur, you must be able to understand it to help you find out the company's financial condition and assess the company's performance in the current year. Then you can make the right decisions for the next company's operations based on that report.



To find out more about how to make financial reports, you must understand very well the meaning of the components.


Know the Definition of Financial Statements


The definition of financial statements in general is the result of the accounting process in a certain period of time which is the result of collecting and managing financial data which is presented with the aim of being able to assist in returning a decision or policy.


In a complete financial report, there are balance sheets, income statements, changes in financial position reports, notes and other reports and explanatory material that are an integral part of the financial statements.


In the preparation of these financial reports, various data sources are used in their production. Such as invoices, receipts, notes, credit, reports, banks, and so on. That was the meaning of financial statements in general, then what we will discuss is the purpose of the financial statements themselves.


Meanwhile, according to investopedia, the financial statements consist of a balance sheet and a profit and loss calculation as well as a report on changes in equity. The balance sheet shows or describes the amount of an asset, a liability and also about the equity of a company at a certain date.


However, it is different from Debitor who says that financial statements are a depiction of the financial condition and results of operations of a company at a certain time or for a certain period of time.


In this case, it can be concluded that financial statements are records of a company's financial information during an accounting period that can be used to describe the company's performance.


Components for Making Financial Statements


Before making financial reports, there are a number of things that you should pay attention to. One of the components that must be present in the financial statements, namely.


1. Balance


This balance sheet is a financial statement that displays information on how the financial position of the entity is at a certain date, usually at the end of the year.


2. Profit and loss


In this income statement, you can see a report on the results of operations of an entity for a certain period, for example, a month or a year.


3. Statement of equity or owner's capital


This report provides an overview of the changes in owner's equity in an entity for a specific period, for example one month or one year.


4. Cash flow statement


The cash flow statement describes the amount of cash inflows or cash receipts and the amount of cash outflows or cash disbursements in a certain period.



How to Make Financial Statements


For those of you as a beginner in making financial reports, you must understand and understand how to make financial reports. Of course you also have to be careful, because later the information presented is very much needed in making decisions. Here's how to make a financial report.


1. Prepare a trial balance


The first way to make financial statements is to prepare a trial balance. Before knowing the purpose of financial statements, you need to know in advance about the meaning of financial statements.


The definition of financial statements in general is the result of the accounting process in a certain period of time which is the result of collecting and managing financial data which is presented with the aim of being able to assist in returning a decision or policy.


In a complete financial report, there are balance sheets, income statements, changes in financial position reports, notes and other reports and explanatory material that are an integral part of the financial statements.


In the preparation of these financial reports, various data sources are used in their production. Such as invoices, receipts, notes, credit, reports, banks, and so on. That was the meaning of financial statements in general, then what we will discuss is the purpose of the financial statements themselves.


2. Collect the data needed to make the number of adjustments


The next way of making financial reports is to collect the data needed to make the number of adjustments. Some transactions may not have been recorded and are still not in accordance with the conditions at the end of the period, so the data is collected to make an adjusting entry.


3. Prepare a work sheet or worksheet


The next way to make financial reports is to compile a follow-up balance sheet or worksheet. A work sheet or worksheet is a way to facilitate the preparation of financial statements starting from a trial balance and adjusting it to the data obtained from adjusting journals.


Then, the adjusted balance will appear in the adjusted trial balance column and represent the balances that will be reported in the balance sheet and income statement.


4. Prepare a financial report consisting of a profit and loss statement and a report on changes in capital


These reports can be compiled directly on the work sheet, because the work sheet has separated the amounts reported in the balance sheet or income statement. Then, the two reports are transformed so that a balance sheet and income statement can be produced that are easier to read and analyze.


5. Adjusting and closing accounts


After the accounts in the general ledger are adjusted, the next step is to make a closing journal to close the nominal accounts to the profit and loss account and to transfer the profit and loss balance to the profit and loss account. After that, the information in the journal is posted to the general ledger according to the accounts concerned.


 6. Prepare a trial balance after closing


The last way to make financial statements is to prepare a trial balance after closing. To check the debit and credit balance of accounts that are still open, a trial balance is made after closing which contains only real accounts, not including the nominal that has been closed.


Photo by Pixabay


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