Financial statements are reports that address the financial condition of an entity in a certain period. Through financial statements, you can monitor the development of your business. Information in the financial statements themselves is not only used by the owner or management but other parties can also use it. As for the stakeholders who often use financial reports such as investors, creditors, the government and even the general public. Do you know how many formats are financial statements? There are several types of financial statement formats that you need to understand.
According to Financial Accounting Standards in force in Indonesia, complete financial statements consist of 5 types of reports, namely the income statement, statement of changes in capital, balance sheet, cash flow statement and notes to the financial statements.
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The five types of reports have their own functions and roles in the financial reporting agenda of a company or business. Usually, every company has their own needs, so the use of these reports is different. The thing that needs to be understood by us is that a company is not required to make all of these reports.
The use must be based on the needs of the company, so it is important for the accounting department to know the function of each type of financial statements clearly so that there is no need to spend effort that is useless or fail to produce reports with liable information . In addition, the accounting staff must also prepare a continuous report composition with each other so that the financial reporting process is well organized.
To find out in detail the format of existing financial statements, the following is a complete review.
1. Profit / Loss Statement
An income statement or income statement or profit and loss statement is a financial statement that serves to assess the financial performance of whether the company experienced gains or losses in one accounting period. In addition to knowing the profit or loss, the income statement is also made to provide information about company taxes, management evaluation materials and assist in decision making.
In the income statement financial format, there are several things or aspects that are in it, including: income, expenses, cost of production , tax costs, profit or loss for the company.
a. Format of the Financial Statements of Income
Basically, the income statement format consists of two forms, namely single step and multiple step .
· Single Step
The form of a single step income statement is simpler. In this format all revenues and profits derived are placed at the beginning of the income statement. Then reduced by all expenses or costs incurred by the company. The difference between total revenue and total expenses is what shows the company’s profit and loss for the period. The form or format of the single step income statement as follows:
· Multiple Step
Unlike the single step , the multiple step financial statement format is more complex. To create a multiple step income statement , you first need to separate operational and non-operational transactions. Second, you must compare costs and expenses with related income. After that you can only calculate the operating profit. Operating profit will show the difference between ordinary activities and extra ordinary or incidental activities. The multiple step financial statement format is as follows:
2. Capital Change Report
Capital change report is a report that describes changes in the form of an increase or decrease in net assets during one period. At the beginning of the establishment of the company, you as the owner of the company must deposit their capital. During operation, of course the initial capital will change according to performance. For example, if in the current period the company suffers losses then capital will be reduced. Conversely, if the company experiences profits, capital will increase.
In the report on changes in capital, you can also see the cause of changes in capital not only changes. Some data needed to make this report is the initial capital, prive or withdrawal of funds in the period and the total net profit or loss obtained. To make this report requires profit and loss, this report is made after the income statement is complete. For an example of the capital change financial statement format, there is below:
3. Balance Sheet Report
As the name suggests the balance sheet or balance sheet is a financial statement that shows the position and financial information of a company. In the balance sheet, you will see complete and detailed information about assets, liabilities and company capital. In other words, elements in the balance sheet are only these three accounts. To create a balance sheet, you can use the accounting equation guidelines, namely:
Assets = Liabilities + Capital
Assets for the asset side while liabilities and capital for the liability side. Remember, the assets and liabilities must be balanced. Examples of balance sheet financial statement formats such as the following:
4. Cash Flow Statement
The fourth type of financial statement is the statement of cash flow or cash flow statement . The cash flow statement provides information about the company’s incoming and outgoing cash flows. In addition, the cash flow statement also functions as an indicator to predict cash flows in the future period. Statements of cash flows are a form of accountability for cash inflows and outflows during the reporting period. The cash flow statement consists of 3 main activities, the following three activities:
· Operating Activities ( Operating Activities )
Operating activities are cash flow statements that consist of company operational activities. In other words, this activity can be obtained by entering the value of the influence of cash / bank on transactions involved in determining net income. Examples such as, sales of goods and services from customers, purchasing inventory, and others.
· Investment Activities ( Investing Activities )
This investment activity is related to cash flow activities that result from the sale or purchase of fixed assets.
· Financing Activities ( Financing Activities )
As the name suggests, funding activities are cash activities that originate from additional company capital. To calculate this activity, you can enter the value of adding or subtracting cash from long-term liabilities and owner’s equity.
The following is an example of a cash flow financial statement format:
5. Notes to the Financial Statements
Know about notes to financial statements? Notes to Financial Statements (CALK) are part of an entity’s financial statements. However, financial statement records are not mandatory for the company. So usually companies that make notes on financial statements are large-scale companies or companies that go public .
The purpose of making this report is to provide a detailed explanation of things in other types of financial statements so that the location of the notes on the financial statements is behind itself. This report will facilitate you in understanding other financial statements because of its very detailed contents. So do not be surprised if the form of notes to these financial statements is very thick and consists of many pages.
That’s the information about the format of financial statements that you must know. That way you can distinguish the differences in financial statements from one another. In addition, by understanding the format of financial statements, you can also make financial reports properly and correctly. That way you can assess the financial health of your business well. To be easy in making financial reports you can use the help of online accounting software such as Journals.
