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Financial Statements

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We'll also prepare the following unaudited year-end financial statements as part of your bookkeeping package to be filed with your corporate tax return:

The Retained Earnings Statement

A company's changes in retained earnings over a specific time period are shown in the statement of retained earnings. It displays changes over the course of the period, such as net income or shares issued, in addition to the retained earnings at the start of the period.

Analysts use this statement, which reconciles the period's beginning and ending retained earnings using data from the Income Statement, such as net income, to understand how corporate profits are allocated.

Balance Sheet

The balance sheet is an account of a company's assets, liabilities, and shareholders' equity as of a particular date. This would be the corporation's fiscal year-end for tax purposes.

Profit and Loss Statement

The income statement (P&L) displays the results of operations for a given period, while the balance sheet displays the financial position at a particular point in time. Revenues, cost of sales, gross profit, operating expenses, and net profit are all displayed on the income statement.

Adjustments to Financial Statements

Your financial statements need to have a few year-end adjustments made before they are finalised. These modifications could consist of:

Earnings accruals.

Work in progress, or money received but not yet invoiced, may fall under this category. Hours of labour for an unfinished project would be one example.

Changes in expenses.

Here are a few instances of expense adjustments:

  • Employee hours worked in between pay periods
  • Employees' accrued but unpaid vacation time
  • Asset Amortization and Depreciation
  • Inventory adjustments are made to balance the amount recorded in the company's books with the amount of actual inventory.
  • Prepaid expenses are sums of money paid up front for items that are anticipated to be used later on, like insurance, rent, and taxes (paid in installments).
  • Items for the year-end bank account reconciliation

    • Accounts Payable & Assurance Levels

    The financial statements we prepare are appropriate for internal use as well as tax purposes, but other external users—banks or other creditors, shareholders in the company, or potential buyers of a business—may need some level of assurance regarding their accuracy.

    Compilation (Reader's Notice)

    A compilation, also known as a Notice to Reader or NTR, offers very little assurance other than the fact that a CPA firm compiled the financial statements. In general, the NTR says, "We express no assurance thereon as we have not performed an audit or a review engagement in respect of these financial statements."

    Financial statements prepared by a CPA firm might be adequate for certain external users of the statements, despite the fact that no guarantee is provided.

    Evaluate Involvement

    Additionally, a review only offers the following level of assurance:

  • Generally Accepted Accounting Principles (GAAP) were followed in the preparation of the statements by a CPA, and the statement "nothing has come to our attention that causes us to believe that the financial statements do not present fairly, in all material respects"
  • Banks, other creditors, and certain other external users can usually find sufficient information in reviewed financial statements.

    • Audit

    Large, publicly traded corporations and nonprofit organisations are typically the only ones that need audited financial statements. By saying, "In our opinion, the financial statements present fairly, in all material respects, the financial position of XYZ," they do offer some assurance.

    Preparing Financial Statements

    Your year-end financial statements will be prepared and ready for taxation as part of our bookkeeping packages. Make an appointment with us right now to enrol in one of our packages, and let us take care of all your bookkeeping needs so you can relax.