Tips To Write A Financial Report

Accounting is commonly denoted to as “the international language of business.” Another definition of accounting is, The organized recording, reportage, and inquiry of financial contacts of a business. Appropriate and precise accounting allows the leaders of an association to measure its financial powers and flaws so they can take knowledgeable business conclusions. A financial report is a document that explains the financial health of an organization. It includes balance sheet, statement of cash flows and an income statement. Generally, these statements are reviewed and analyzed by the business managers, government agencies, financial analysts, investors and board of directors. It is important that people working in the finance department of the organization should submit the same in timely manner in a clear and accurate manner.

Even though, preparation of such a report seems to be a daunting task, particularly for those, who have entered into the first job, the best thing they can do is to go through many sample financial statements reports to make the preparation job easier. Here are some tips that will help in the preparation process:

Decide on the time frame
Before you start writing, it is important that you should be aware of the period for which you are preparing the statement. Mostly, they are prepared in a quarterly, half-yearly or annual manner and some companies also require them on a monthly basis. So, you will have to work as per the requirement of your organization. When you view many sample financial statements reports, you will get an idea about the preparation for different time period like monthly, quarterly, half-yearly and yearly.

Review the ledgers
Before starting the preparation, you should also take the ledger books to find whether the data in the ledger book is up to date and whether it is properly maintained. Ensure whether all accounts payable and receivable are documented rightly. It is also important to make make sure whether all the stock clearance in the form of sale and all the stock availability in the form of purchases are maintained up to date. You can find financial analysis report examples over the internet and these examples will be helpful for you in the initial stages, until you get used to the preparation process.

Gather any missing information
When you see the financial analysis report examples, you can compare each and every item in the examples and whether appropriate data is available for you in the preparation of the report for your organization. If any information is missing, you can take steps to gather the same. There are chances that some transactions might have been missed to register and so check in the appropriate files physically at your premises to make entry for the missed records as well. Sample financial analysis report in excel format can be found from reliable websites over the internet. Just look for a safe website to download the sample financial analysis report in excel format and with the help of this sample, prepare the actual reports for your organization.

Preparation of Annual Financial Report
Business owners decide to form a corporation because it enables them to opt for a professional business structure and they can also take advantage of some liability and tax benefits. However, there are certain requirements that have to be met when corporations are established such as having a board of directors, holding annual meetings and filing annual financial reports. The purpose behind financial report filing is to show the current information and position of the business. These reports typically contain the balance sheet of the business, its income statement and also a statement of cash flows.

Here are some instructions that can help in making these documents for completing the financial report
Determine the time period for which the financial statements have to be prepared. For instance, if you wish to prepare a balance sheet as at May 31st, 2012, you may want to prepare a statement of cash flows and an income statement for the year June 1, 2009 through May 31, 2010.


 

The general ledger should be reviewed to ensure all items have been correctly posted. Any errors should be corrected before the income statement and balance sheet. It is also a good time to make note of all non-cash flow expenses such as amortization and depreciation. The balance sheet should be prepared. All the assets, liabilities and equities should be listed in their dollar amounts using the trial balance. The sum of total assets should be equal to the sum of total liabilities and total equity.

A classified balance sheet should be created by separating assets into different categories like fixed assets, current assets and other assets. Likewise, liabilities should also be categorized into short term and long term liabilities. Now is the time to prepare the income statement. The total of all income should be recorded using the trial balance and allowances and returns should be subtracted. The cost of good section including direct material, labor, purchases and other job costs should be prepared. Arrive at gross profit by subtracting cost of goods sold from net sales. List all expenses and deduct them from the gross profit to arrive at profit before tax.

Retained earnings should be reconciled per the balance sheet and income statement. This is the combination of profit from previous years with that of the current year profit or less current year loss as well as less distributions and capital contributions. Prepare a cash flow statement by categorizing the movement of cash inflow and outflow in different sections including operating, financing and investing activities.

Once the report has been prepared, it has to be submitted to the appropriate authorities from where it can be obtained by interested parties. The problem is that a Certified Public Accountant has to prepare this report in most cases. You can hire accounting services that offer you financial statement preparation as well as financial report filing at affordable rates. If you want to hire a person, who can handle all the activities and operations related to finance, then you need to check all the possible skills, a person has. Moreover, you can hire a controller on a full-time or a part-time basis. A full time or part time CFO can do the same things, but in a different way and charges.