Financial Statements
Financial statements presented in constant pesos resources or profits generated in the operation, the main changes in the financial structure of the entity and its final reflection on cash and cash equivalents through a period of time. The term “constant dollars, pesos of purchasing power represents the balance sheet date (last year reported the case of comparative financial statements).
Objective
The objective of financial statements of a company is to provide information about the financial position, operations and changes in it, useful for a wide range of users in making economic decisions.
TYPES OF FINANCIAL STATEMENTS.
The basic financial statements include: balance sheet if the end of an exercise and Trial Balance Sheet or when monthly; Statement or Profit and Loss Statement are cumulative monthly until the end of the year, Statement of Changes in Heritage; Cash Flow Statement, and Notes to the Financial Statements, which relate to year-end.
Whatever the elements and divisions of the first two states is important to note the presentation rules and valuation to be considered when developing, which are covered in the series C of accounting principles, which include a newsletter for each field.
Some rules are:
1. When the balance of the creditor is another bank account upon submission of the reclassified balance that must balance against the person who originated it.
2. If you have a receivable and a payable in the name of one person must be subtracted from the balance and showing only the amount corresponding to the account balance has increased, obviously due to the difference.
3. The share of social capital which has not yet been shown is represented by a balance in the account of shareholders, which should not appear as an asset account, but must appear in stockholders’ equity less the balance of social capital .
4. The balance of inventories should be reflected in the assets after the accounts receivable.
5. In the case of a person who has a long maturity, but which has set up a monthly payment plan to liquidate that portion of the debt that will be awarded for a term not exceeding one year should be considered within the current liabilities.
CONTENT AND USE OF FINANCIAL STATEMENTS.
The financial statements provides information on the financial position, changes and the operation of the company. The structure of the Trial Balance contains assets (holding company), liabilities (obligations to third parties), and capital (participation of the owners or shareholders). You can determine the state of liquidity (cash available in the near future after deducting financial commitments for the period), solvency (availability of long-term cash to meet obligations when due), and profitability of assets and capital.
On the other hand, the income statement presents information on the development of the company, and measure the operation of the same through the generation of profits or income. The main elements for such measurement is revenue and costs or expenses, through which it determines the company’s ability to generate cash flows and measure the effectiveness with which you can use. Similarly we can evaluate the administration, their responsibility and have evidence for making decisions, whether to keep or sell their investment and confirm or replace management.
The Statement of Changes in Equity, for its part, shows the movements that have occurred during a period, in the balance sheet as capital or contributions from the owners or shareholders, and also shows recorded in retained earnings outstanding capital stock or distribute and reflects the distribution of dividends available to shareholders is no profit sharing in order to strengthen their business. In Cash Flow provides information on the ability to generate cash flow from operations, investing activities and financing, and through this we can analyze a company’s ability to pay its commitments: salaries, suppliers creditors and dividends to its owners. It also is a tool for determining funding needs. Notes to Financial Statements on the other hand, are further information on general information about the company, the accounting policies adopted, clarification of the risks, uncertainties and changes in prices affecting the company and other resources and obligations not recognized in the Balance Sheet, also contains references to financial data of the country.
