Here Are 8 Ways to Prepare Financial Reports Better

How to Prepare Financial Reports

As an accounting student, you may be asked to prepare a financial report on a company as one of your assignments to put what you have learned into practice. A financial report is a document about a company’s financial health. It will include a balance sheet, an income statement and a statement of cash flows.

To prepare financial reports involves:

This report is the financial status or snapshot of a business within a given period of time. The document is listing down the assets and liabilities of the firm or company, and then the calculating the difference between the two. It is called the net worth or owner’s equity. In accounting equation, it is assets = liabilities plus owner’s equity, which is the balance sheet basis. The report is prepared when the adjustment of entries are done in general journals, wherein the entries have already been reported to the general ledger. This document account has been footed to come at the period end overall totals, and then what’s next prepared is the adjusted trial balance from the general ledger amounts. The balance sheet lists all asset and liabilities of a company and the owner equity. The total assets are usually listed in order of liquidity on the left side of the statement. Total liabilities are listed on the right side of the statement based on when payment is due. Owner equity is included underneath total liabilities. The two sides should balance showing that Total assets =Total liabilities + Owner equity.

The income statement shows all the expenses and all of the revenue of the company over a period of time. It will include the cost of goods sold, operating expenses which will be subtracted from total revenues to arrive at net profit before taxes. Subtracting taxes from net profit will give the net income. It is the ‘profit and loss report’ (P&L) or statement in accounting. This report lists the company’s income, ‘expenses and then ‘net income’ or loss, which is equal to the “income – expenses.”  The tax return of a business makes use of a variation of the income statement to come up with the taxable income. The P&L report is prepared following the adjustment of the entries in the ‘general journal,’ and all the entries are posted to the company’s accounts  for the ‘general ledger,’ which has been footed to come at the end totals of the period, and then a specific ‘adjusted trial balance’ has been readied from the totals of the ‘general ledger.’

Closing of the entries are required in clearing out a business’ revenue as well as accounts of the expenses, as you’re beginning another accounting period.  Closing the books require closing the revenue accounts, closing the expense accounts, transferring the income summary balance into a capital account, and then closing the drawing account.

The statement of cash flows records all money coming in and all monies going out of a company. It will be broken down into cash flows from operating activities, cash flows from investing activities and cash flows from financing activities.

Tips and Suggestions to Prepare Financial Reports

Here are eight tips and suggestions to keep in mind when you prepare financial reports that can help make them better:

• Use conventional formats for statements to make them easy to read: Don’t try to experiment. Financial reports are business documents requiring standard formulas and setting general rules. Do not use complex formats, or make a hard-to-read and understand report. Take note that financial statements are formal accounts or records of the financial activities of a company. These reports show the financial liquidity, performance and strength of the company. Without even saying, these statements show the overall effects of the business events and transactions on an entity could be a person, a firm or an entire organization. If you need an accurate and professional report, don’t think twice in getting help from our pros.
• For figures that require estimates be realistic: You should be realistic when figures require estimates. Do not go under or over those estimates. There are specific formulas to use in estimations, in the nearest tens, hundreds, thousands and so on. Take note of those formulas and account correctly even when working on estimated figures. If you’re not realistic, you might not be able to come up with an accurate estimated result. You can consult our pros at Do My Accounting Homework if you’re struggling coming up with realistic and accurate results. Our accounting experts are on standby helping clients and customers deal with the hard job of making realistic estimates for their financial reports.
• Make sure all your numbers add up. Double check the numbers: Financial reports are serious documents, which require 100% accuracy to make proper reports. When working with numbers, make sure that they add up. The best way to do it is to double-check the numbers to ensure that you didn’t commit errors in your report. It takes time and effort to do it and come up with accurate results, but there is no other way to go but ensure of perfection in making reports. We know and understand your struggles, so if you’re looking to calculate correctly and come up with zero errors, don’t hesitate in contacting the pros at Do My Accounting Homework.
• Choose the appropriate system. Accrual accounting is generally the method most often used: Accrual accounting is an accounting method, which makes use of expenses and revenues when they’re incurred whether or not cash is exchanged. Accrual means to an individual entry, which records expense or revenue even in the absence of cash transactions. Many firms are making use of one of the two accounting methods in bookkeeping – namely, the accrual basis or cash basis. But while many businesses make use of the accrual accounting method, what to choose actually relies on your sales volume, regardless you sell on your business structure or on credit. If you’re looking to come up with an accurate accounting method that works in your case, but don’t know which way to start, you can ask our experts at Do My Accounting Homework.
• Choose the most appropriate way to show depreciation of capital assets: Take note, depreciation is your company’s allocation of asset’s cost over its most useful life. Every period, your business incurs depreciation expense to account for an asset’s use in your operations, for instance. You must choose one method to find out depression of an asset based on some factors. In general, you must consider whether to use an asset an equal amount for each period throughout its useful lifespan. For this example, you may want to choose the straight-line depreciation method. Accounting for depreciation of capital assets isn’t easy and choosing which one of the several methods available to use is another challenge. Get help from us if you find it more confusing than not to choose the best way to show the depression of your capital assets.
• Perform financial reporting analysis of your report to see if you selected the most appropriate methods: To test if you choose the correct accounting methods in your financial report, you should perform or conduct a financial reporting analysis. We know that it takes a lot of effort and time to do it, and most likely, very pressuring if you’re managing a growing business. While it is a pressure on your shoulders, you must still come up with a thorough analysis to test or check that you have chosen the right methods. It is not one or two business owners that selected the wrong method, however. That is why we recommend seeking help from an expert in accounting financial reports. They can make an accurate report and later analyze if they properly chose the correct way.
• Make sure all data was allocated correctly and included where it should be: Making entries in the financial reports, you must do it correctly, too. If not, you might not properly allocate the data where it should be. This is one of the biggest mistakes of those making financial reports. We understand them though.  It is not an easy undertaking to make sure that the data entered was allocated properly and entered in the proper places where they should belong. Committing such mistake, you won’t be able to come up with the correct figures you’d need to create a correct report, as we know it could ruin those metrics on the performance, assets and other aspects of your business. Get help from the pros if you’re looking to.
• If possible have somebody who knows what they are doing double check your report before you submit it: Do you need help in double-checking a report before submitting it? The wisest thing to do is to seek help from the pros that know what they’re doing. Our experts are Ma and PhD degree holders in accounting, banking and finance, among other related subjects and courses. You can rely on us for help in any type of accounting and financial reports. We’ve been working for professionals, students, firms and corporations, among others, in coming up with an accurate and comprehensive preparation, reporting and analysis of financial and accounting documents. If you need help in double-checking a report before submission, you can always rely on the experts at Do My Accounting Homework. Contact us today!

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