Financial statements in companies
(Edited)
Dear readers, the financial statements are those where the accounting records are included and where the results that have been obtained are determined, it is for this reason that its purpose is to determine the profits or losses during the accounting period. It is necessary to take into account the importance of the financial statements, since through them the equity situation of a business unit is known in depth, and in this way it is possible to make different decisions.
In this sense, Brito (2012) points out that financial statements are a representation of the financial situation and financial performance of the entity, which is useful to a wide variety of users when making decisions. In general, according to the author, we can say that the financial statements seek to show real results according to the situation in which the entity is, so it is necessary to take into account that they determine whether the company obtained profits or losses during the accounting period.
On the other hand, the same author mentions that there are 5 financial statements and through them the information corresponding to the company is obtained. Likewise, we can say that these financial statements are the following: Statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flow and finally, explanatory and explanatory notes.
As mentioned in the previous paragraph, it is important to know how to identify each of the financial statements mentioned, since each one has a different function and what they seek is to determine the situation in which the entity is at the time. In this sense, defining a little each of these statements we can say that the statement of comprehensive income is one that through its application can determine the income, costs and expenses and thus identifies the profits or losses that have been obtained.
The statement of financial position is the one that shows the assets, liabilities and capital and allows an analysis of the resources and their origin. Also, the statement of changes in equity, its function is to determine the changes that have occurred in the accounting period in order that each of the partners that make up the companies have a little more knowledge.
In the same vein, the cash flow is the one where the investment activity determines the resources that the entity has obtained at a given time either in the medium or long term. Finally, the explanatory notes are those that are responsible for explaining in detail all the events, whether numerical or not, that may be presented in the financial statements and their presentation is mandatory.
Dear readers, knowing a little about each of the financial statements, it can be demonstrated how important it is to apply them in a company since they determine all the necessary accounting procedures and thus know how the company's performance is going according to its equity. It is necessary that the company has knowledge about the liquidity in which it is since its patrimony may depend on it.
| Bibliographic references |
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Brito, J. (2012). Financial accounting adapted to the Ven¬-Niff for SMEs. Tomo II. Ediciones centros de contadores. Venezuela: Lara.
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Hello @amestyj, thank you for sharing this important information in a simple and concrete way.
I share your opinion of how relevant it is to identify and understand the financial statements in companies, to analyze their current economic situation and make timely decisions to ensure the continuity and profitability of the business.
Greetings, happy and successful week.
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