Financial Statement Preparation Services Offered in Chicago and Suburbs
Why Do You Need Financial Statement Preparation Services?
Financial statements reflect the transactions of your business. Financial statements are essential for several purposes. They indicate the financial health of the company. They help banks, investors, shareholders and other stakeholders to understand the financial status of the company. In today’s world, financial reporting is becoming more sophisticated. Banks and other lending institutions demand detailed financial reporting.
Types of Financial Statements
We provide four types of financial statements.
Balance sheets represent the assets, liabilities and equity of a business at a point in time. Assets are classified into two varieties: current and long-term. Current assets are those that are cash or can become cash within a year. Examples of current assets are cash and inventory.
Long-term assets are those that will not become liquid within a year. Examples of long-term are long-term investments and fixed assets (land, buildings, and equipment).
Similarly, liabilities are also classified as either current or long-term, depending on when they must be paid. Current liabilities are amounts due to creditors within a year, and include bills owed to vendors.
Long-term liabilities may include notes payable, loans, and deferred tax liabilities.
Owner’s equity is a measure of the company’s net worth, and calculated by subtracting total liabilities from total assets. Equity may include common stock, paid in capital, and retained earnings.
Income statements provide the profit margins that the company has achieved in a period of time. Total revenue generated for that period minus total expenses that incurred to generate that revenue is the income for that period.
Statements of Retained Earnings
The amount of net income which is left in the business after the distribution of dividends or withdrawals by the owner is called retained earnings.
Cash Flow Statements
A company may be on the whole profitable, but still not have enough cash. The cash flow statements indicate the company’s ability to pay bills and run day to day operations. Cash flow statements reflect cash sources and uses for a given period of time.
Do you need financial statement for your business?