Importance Of Financial Statements
Anything that is about accounting will surely consist of debits and credits but it will be all of nothing if you cannot make them into financial statements. You will have to work on pieces of data about account balances and assets that the owner will have before you can turn them into financial statements. In order for you to construct the financial statements you will have to get the owner’s equity on both revenue and expense so that you will have accurate data on this. The financial statements will be easy, you can be able to construct them by using the general entries that comprise of trial balance, income statement and also the retained earnings, you will also need the balance sheet for this one.
You will have to handle the trial balance first before you can work on the other financial statements. You have to secure the general journal before you can construct the first statement. The trial financial statement is constructed to help the owner see the credit and debit he or she has in a certain period of time and if they have already been accounted for. There will be three things you need to get in order to construct the statement, you will need the company name and the title of the statement which is trial balance and you will also need the date it was issued. This will be an easy task for a professional, it will only mean to simply list the accounts and put them in the appropriate debit or credit column. The total of each column will be added up in the trial balance. You will have a n identical and exact amount that you were expecting only if the accounting that your accountants did are correct. You will have to make sure that there were no listing balances that were on the wrong side because human errors will really deal a huge damage to a accounting endeavor.
An income statement is the best way of getting the exact amount of money you are using and coming in for your company. It will be like the trial balance as well, you will be needing the name of the company and the name of the financial statement and also the date. However the format of the date will be different from the trial balance. You will also need the details from the owners equity accounts that will be dealing with the revenue and the expenses. You will have to list the revenue account first because it will most likely have a credit balance and put the expenses next which will most likely have the debit balance. This will be quite simple, all you have to do is subtract the total revenue and total expenses and you will get the net income.On Experts: My Thoughts Explained