Trading Company Financial Statements

This time we will discuss the financial statements of trading companies which include profit / loss reports, reports on changes in capital, balance sheets, debt reports, inventory reports or stock and cash reports. Happy reading …

 

Trading company financial statements After the working paper or work sheet is prepared, the next step in the trading company accounting cycle is the preparation of financial reports.

 

Financial statement (financial statement) is the final result of accounting which is a summary of financial transactions.

 

Financial statements are presented with the intention of providing information regarding the position of assets, debts, and capital as well as the gain or loss that shows the results of activities that occur in the household of the company and assists the leadership in making decisions.

 

One type of company that is easy to run is a trading company. Why? Because his business activities are limited to buying merchandise and then selling it again without changing the shape of the goods.

 

Therefore, this company is called a trading company, namely a company that trades products through buying and reselling.

 

Trading Company Financial Statements

 

As in service companies, in general, financial statements prepared in trading companies include:

 

Income statement,

Statement of changes in capital,

Balance sheet,

Debt Report.

Inventory or Stock Report.

Cash flow statement.

Table of contents :

Trading Company

Trading Company Financial Statements

Example of a Trading Company Financial Report

  1. Income Statement
  2. Statement of Change in Equity
  3. Statement of financial position
  4. Statement of Cash flow

Share this:

Trading Company

A trading company is a company whose activity (business) is to sell a product from a supplier to a consumer with or without changing its shape, taste or quality and obtaining a profit from the difference in sales.

 

For companies, both trading and service companies, compiling financial reports is one of the routines that must be done to obtain a clear picture of information that occurs in the company.

 

Also Read:   Financial Accounting According to Experts

Trading Company Financial Statements

Previously discussed in detail examples of service company financial statements. This time we will discuss in detail how the financial statements of trading companies.

 

The financial statement (financial statement) is a stage of presenting the financial position and financial performance of an entity in a structured manner.

 

The purpose of preparing financial reports is to provide information about the entity’s financial position and performance, as well as cash flows that are useful for report users in making economic decisions. The financial statements consist of:

 

Statements of profit or loss and other comprehensive income (Statement of income and Other Comprehensive income)

Statement of changes in equity (Stetement of Change Equity)

Statement of financial position

Cash flow statement (Statement of Cash flow)

Example of a Trading Company Financial Report

Example of a Trading Company Financial Report

 

  1. Income Statement

The definition of an income statement is a report that reflects the company’s operating activities. The income statement provides detailed information about the company’s income, expenses, profit and loss for a specific accounting period.

 

Then what groups of accounts are included in the trading company income statement? Among them are the groups:

 

Income

Cost of goods sold

Operating expenses

Expenses outside of operation

Income outside of operations

Other conference income

We can define income as a form of inflow or an increase in assets, a decrease in liabilities, which results in an increase in equity / capital.

Expenses, are recognized as decreases in economic benefits during the reporting period in the form of decreases in assets or outflows, or incurred in liabilities that results in decreased equity.

Other comprehensive income or income (OCI) is total income less expenses.

Cost of goods sold (COGS) is recognized as the incurred cost of producing goods and selling them in business activities, including raw material costs, direct labor, and overhead costs. Hpp is simply the cost of sales. The components of the cost of goods sold include:

Beginning Merchandise Inventory is merchandise inventory available from the beginning of the period.

End of Merchandise Inventory is inventory available at the end of the period.

Net purchases, are the total purchases of merchandise both in cash and credit, plus the purchase agreement and deducted by the purchase discount or purchase returns incurred by the trading company.

Also Read:   Accounting Components

  1. Statement of Change in Equity

The change in equity report will report the changes in the individual shareholder equity accounts and the total shareholder equity during the period.

 

  1. Statement of financial position

Balance sheet or referred to as a statement of financial position. Assets, liabilities and owner’s equity (shares) of a business company at a certain date will be reported on the balance sheet.

 

Financial position reports:

 

Account form, in this form the assets and liabilities will be parallel (accruals on the left side, and liabilities on the right).

The form of a report (report form), in this form the assets and liabilities are arranged downward (assets above, and liabilities below).

  1. Statement of Cash flow

The cash flow statement will report the inflow and outflow of money (cash) of trading companies. The cash flow statement that reports cash flows during a certain period will be classified according to operating, investing and financing activities.

 

Cash Flows From Operating Activities (Cash Flows From Operating Activities)

The first section will contain information about cash flows related to the company’s operational activities. for example: cash received from customers and payment of cash for expenses and payments to creditors.

Cash Flows From Investing Activities

The second part will contain information about cash flows (both incoming and outgoing) related to investment activities carried out by the company. for example: cash payments for the purchase / sale of fixed assets.

Cash Flow From Financing Activities (Cash Flow From Financing Activities)

The third section will present information on cash flows (both incoming and outgoing) related to financing activities. For example: cash received as an owner’s investment or cash withdrawals by the owner.

Leave a Comment