Types of Financial Reports You Must Have in Your Business

Financial statements are important for every business because they illustrate the concrete financial condition of the business. Both small businesses and large ones, of course, have to make financial reports.

Financial statements tend to be complicated and must be done by experts. Of course, as a boss, you do not want to accept financial statements carelessly. You can hire an accounting expert from lokalerevisorer.dk to manage it.

Some business owners still have not implemented a business financial management system properly. This is because they still use the money from the sale of their business for their personal needs before the financial statements are made.

Moreover, no shopping receipts are saved so it makes a frenzy about how much money has been spent on a business need. Thus, financial statements are very important. This article will explain what types of financial statements should be in your business.

Income Statement

An income statement is the first type of report that a company must-have. With this report, you can find out the business performance in a certain period. This report usually contains tax burden, minority rights, income aspects, and so on.

This report can be used to reflect on capital that can be used for future needs of your business in the future. This report can explain how much loss was obtained in that period.

The intended loss may be the result of a comparison with the achievement of previous sales. Also, it can compare expenses with the previous period.

Balance Sheet Reports

In addition to the income statement, you should also pay attention to the business balance report. A balance sheet is a report that can explain the balance of transactions that occur during the related period. The balance sheet must contain assets, liabilities, and equity. In the world of accounting, assets are the sum of liabilities and equity.

Also, if you want to know about business debt, you can use a balance sheet to see it. That way, get an idea of ​​the status of your business whether it’s better or worse than before.

Cash Flow Report

This cash flow report details the transaction, which is the costs that go out and the costs that go into the financial section of the business. With this report, you can evaluate the cash flows of the previous period because everything is indeed recorded in this report. Also, this report can be used as an indicator of financial planning in the next period because you can evaluate every transaction that has occurred in the previous period.

Capital Change Report

Every business certainly hopes to spend less capital than the previous period. However, there is still the possibility that more capital will be issued than the previous capital. Therefore, before preparing the financial statements of capital, the income statement must be completed first.

With an income statement, it can help an effort to detect whether there is a profit or a loss. After that, the capital change report is prepared.

Furthermore, companies can analyze what exactly causes the capital to multiply. Does the error occur in raw materials, the comfort level of workers, or the competence of workers or others?

If there is indeed a depreciation of capital, the cause is sought so that it is considered to be repeated so that capital in the next period can also be reduced.