Both for large scale companies and small scale, financial statements are obligations that must be made at each period. If likened, financial statements are the heart of a company. As an entrepreneur, you must be able to read the financial statements, because the financial statements will greatly help you in knowing the company’s financial condition and assessing the company’s performance in the current year so that you can make decisions correctly for further company operations.
Before discussing further how to make financial statements, let us understand what is the definition of financial statements themselves. According to PSAK No. 1 Year 2015, Financial Statements are structured presentations of the financial position and financial performance of an entity. More clearly in the book Intermediate Accounting, financial statements are defined as a summary of the recording process, is a summary of financial transactions that occur during the fiscal year concerned (Baridwan, 2004).There are four types of financial statements in accounting, namely:
a. Make lists of your profit and loses.
b. A report on capital changes that presents an overview of changes in the owner’s equity of an entity for a certain period.
c. Balance sheet that displays information on how the financial position of the company / entity in a period, usually in one year.
d. Cash flow that describes the company’s cash turnover, regarding the amount of cash in (cash receipts) and the amount of cash out (cash out) in a certain period.
After knowing about the financial statements, it is time to know how to make financial reports. To make financial statements, you can simply journalize transactions, post to ledgers, make a trial balance, and other financial statements.
Very easy right?However, if you still don’t know much about accounting, this might be a difficulty. For this reason, here we will explain how to easily create financial reports.
a. Collecting and recording transactions in journals
Transactions are general activities that are often carried out by companies, whether they are buying, selling, exchanging goods, leasing or other transactions. Proof of transaction is very important, very important thing in accounting so that transaction evidence cannot be lost. Proof of transaction is the basis for recording in making financial statements. Proof of this transaction can be in the form of receipts, receipts, invoices or other types of evidence. The first step in making financial statements is to record transactions made by the company in the current year in the journal. All transactions related to the company’s operational activities must be recorded in a journal in detail.
b. Post journals in the ledger
After keeping a journal, the second step is posting the journal into a ledger. The general ledger is a breakdown of every existing account. It is not difficult to do this, just move the transactions that have been recorded in the journal to the accounts in accordance with the details.
c. Prepare a Balance Sheet
A trial balance is a list of ledger accounts with a debit or credit balance. The next step after making a ledger is to prepare a trial balance. The list of accounts in the general ledger is grouped into liabilities or asset groups. The trial balance is used to check the debit and credit balance of all accounts.
d. Gather the Data Needed to Make a Adjusting Journal
Some transactions may be unrecorded or transactions take place at the end of the financial reporting stage and some still do not match the circumstances at the end of the period, so the data is collected to make adjusting entries.
e. Arrange Lane Sheet
To facilitate the preparation of financial statements, we need to prepare a work sheet or working paper that starts from the data in the trial balance and is adjusted to the data obtained from the adjusting journal. Furthermore, the adjusted balance will be seen in the adjusted trial balance column and is the balances that will be reported in the balance sheet and income statement.
f. Making financial reporting
Reports that have been prepared in the work sheet should be neatly written according to the provisions or financial statement standards.