Preparation Of Financial Statements

Overview

Financial statements present the financial activities and health of the business in a clear and concise manner. The disclosures are made as per relevant laws, regulations, and as needed by the accounting principle that’s used. Financial statements record all the financial data of the business when evaluated and critically analyzed becomes more useful to varied stakeholders. The preparation of monetary statement places a high emphasis on the accuracy, reliability, and relevance of monetary data.

Our Process

Step 1

Analyze and record transactions

Step 2

Post transactions to the ledger

Step 3

Prepare an unadjusted trial balance

Step 4

Prepare to adjust entries at the top of the amount

Step 5

Prepare an adjusted balance

Step 6

Prepare financial statements

Benefits

Review of cash flow

It shows the financial solvency and therefore the ability of the company to pay liabilities to pay its liabilities. The statement of money flow statement breaks the statement into operating, investing, and financial parts. A review of money flow helps us understand whether the business is working under a cyclical revenue stream structure or a uniform revenue model. This also helps the business to take care of and keep the expenditure of the business inline with the revenue model it operates in.

Review of liability

Financial statements presents the short- and long-term obligations of the business. If the owner wants to expand his business, he must check out the statements of monetary position and deduce the logic on whether he should reduce existing liabilities to use for further capital expansion. Lenders check out the financial statements and determine the prospect of business on the idea of revenues, assets, and liabilities

Review of inventory and its movement

The amount of opening and closing stock as a percentage of purchase and sales alongside the changes and movements within the levels of stock throughout the year show the power and nature of goods of the business. It shows whether the goods are in demand, fast-moving or slow-moving, or change within the trend of sales than on. When the goods are slow-moving as compared to industry, it's considered as a negative for the business prospect and growth.

Preparation of budget

Every business must have a vision. to organize a vision, the business must have defined goals and objectives. the target of monetary statements is to organize a blueprint for the longer term by analyzing the past financial statements already prepared and audited. Budgets help to stay the expenses in line with income and sales. The budgets are forecasted using prepared financial statements.

Documents Required

Income statement

Statement of retained earnings

Balance sheet

Statement of money flows

Clear All Your Doubts !

Who will prepare the Consociated Financial Statement?

As stated in Section 129 it's the duty of the Parent Company (Management) to organize the consolidated budget of the company and laid an equivalent before the Annual General Meeting along with a Standalone budget

What are the provisions in reference to the audit of the consolidated financial statement of the Company?

As stated in Section 129 the provisions of this Act relating to audit applicable on company shall, mutatis mutandis, apply to the consolidated financial statements of the company. Therefore, all the supply of Audit applicable to face alone financial statements is going to be applicable on the audit of consolidated financial statements.

In determining control, whether potential equity shares (eg option, convertible bonds, debentures, etc) got to be considered?

The potential equity shares of the investee held by the investor shouldn't be taken under consideration for determining the voting power of the investor.

Who will audit the consolidated financial statement of the Company?

There might be two situations in an audit of consolidated financial statements- when the parent’s auditor is additionally the auditor of all the components to be included within the consolidated financial statements and when the parent’s auditor isn't the auditor of one or more subsidiaries and thus uses the work of another auditor within the audit.
The Auditor of the consolidated financial statements might not necessarily be the auditor of the separate financial statements of the parent or one or more of the components included within the consolidated financial statement.

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