Statement of purpose template for graduate school, All businesses, whether public, private, or nonprofit, need to prepare financial statements in their own performance to present fiscal accountability and accuracy for their stakeholders and individuals with an interest in the company. These statements allow management to generate business decisions, enable creditors to assess loan programs, and provide people with information to make investment choices.
Financial statements provide advice from an organization’s accounting documents about their economic resources and obligations on a particular date, as well as their financial activities over a period of time. These statements are generally prepared according to Generally Accepted Accounting Principles (GAAP), that are the criteria issued by the American Institute of Certified Public Accountants (AICPA), but they may also be prepared on other comprehensive basis of accounting, such as money basis or tax basis, based upon the needs of their consumers.
The balance sheet, as also called statement of financial position, is a summary of a company’s balances as of a particular date, generally the last day of this financial year. The balance sheet is composed of 3 parts: assets, obligations, and possession equity or net worth, with resources in one section and liabilities and net worth in the other, with the two departments balancing. The difference between assets and liabilities will be a organization’s net worth or equity. A organization’s assets also equivalent their liabilities plus owner’s equity, which will reveal how the resources were financed, either by borrowing funds (accountability ) or using the owner’s cash (owner equity).
The statement of cash flows shows how fluctuations in the balance sheet and income statement affect cash and cash equivalents. In addition, it demonstrates operating, investing, and financing activities. The statement of cash flows aids investors and management determine the short term viability of a business, specifically their ability to pay costs. As a CPA I analyze these 3 fiscal statements and their supporting documentation supplied by the company and assesses the general accounting principles utilized. From this info I then create an audited financial statement which will include an opinion, either qualified or unqualified, regarding the character of the fiscal documents.
In compiled financial statements, the organization, not the accountant, but is accountable for its accuracy and completeness of their financial documents. Considering that the statements were not audited or reviewed, they are not certified by a Certified Public Accountant (CPA). No opinion or assurance is expressed in the accounts as to whether the accumulated statements are free from material misstatements or even false/missing info or if they are proven to be true, complete and reasonably presented to satisfy the necessities of the US GAAP (Generally Accepted Accounting Principles).