The financial statements of service companies are something that will not be foreign to a business person because when running their business, of course, the financial statements of service companies are very necessary.
It can be said that the existence of financial reports for service companies will make decisions from companies work well because by looking at how the company’s financial condition through the financial statements of service companies makes the company understand about what steps should be taken or what should not be done so that the company does not experience risks that will have a negative impact on the company.
Apart from that, the financial reports of service companies can also serve as an impetus to increase the business productivity of the company, increase the quantity in products, to increase the quantity volume.
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Types of Service Company Financial Statements
For the type of financial data report itself, there are five main types of reports that are usually used for the company’s business. These various types of financial data reports will be adjusted according to the needs or how the forms of transactions that occur within the company itself. This is because each type of financial data report has different functions and principles.
Therefore, an expert workforce such as an accountant or financial worker should be able to distinguish how to make financial data reports according to the type needed.
The following is an explanation of the five main types of financial data reports that can be used by a company according to their needs, complete with definitions and functions that you can know, namely:
1. Profit and Loss Financial Data Report
For the first type by calculating profit and loss where this one report is a financial report from a company made by an accountant or finance worker to find out how expenses and income are business financial transactions in more detail. The contents of this type of financial data report are income data as well as expenses that are being borne by the company.
Usually making financial data reports of this type is to explain how the financial condition of the company at a certain period. Therefore, do not be surprised if most of the financial data reports are usually done more at the end of the year or the end of the month in accordance with company policy.
With this profit and loss financial data report, shareholders can find out how the financial condition of the company is more updated so that the financial data can be used as evaluation material to determine further policies.
2. Statement of Cash Flow Financial Data
The cash flow statement, also known as cashflow, is a company’s financial records that contain information about cash inflows and outflows that have occurred during a period. This cash flow statement itself will be very useful when an accountant will evaluate the financial structure and net assets of the company.
Not only that, cash flow statements can also be used as an adaptive strategy to deal with changing circumstances and opportunities. A cash flow report can be made using a cash application by an accountant or finance after which it will be submitted to shareholders for follow-up and ensure that income and expenses are going well.
3. Report on Capital Changes in Financial Data
The purpose of making a report on changes in capital is so that a company can describe the increase or decrease in net assets or wealth in a certain period. Reports of changes in capital can be found in large and public companies because most companies must have a complex ownership structure.
The purpose of working on this report on changes in capital is to provide reports on changes in working capital and to make an overview of the investments and funds generated in a period.
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4. Balance Sheet Financial Data Report
This balance sheet usually contains information about asset accounts as well as things that are the company’s liabilities during one period.
Basically, this balance sheet financial report is a combination of all financial data reports. In addition, this one report is also made at a certain time and normally once a year. Making this balance report so that the company can determine how the financial steps will be faced next.
The balance sheet report is a very important financial report because in the preparation of this report you will find information starting from who are the shareholders of a company, who are creditors, government regulations, to other company policies.
5. Notes to Financial Statements
This note will refer to additional information that has a function to help explain how a company arrived at the financial statement figures. Notes for financial statements are not a mandatory thing that must be made by a company.
Making this note usually has the goal of providing clarity to someone who needs it without having the information placed in a statement column.
However, the information contained in these financial statement notes is considered important because it can reveal underlying problems regarding the company’s financial health.
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Functions of Business Financial Reports in the Company
As you know, the process of making financial data reports has several specific functions. One of the most well-known functions of preparing financial data reports is as a tool that can be used to determine policies to be made by company leaders for the next period.
Here are some explanations of the functions that you can get at the company when implementing this financial data report in more detail, namely:
1. Knowing the Company’s Financial Condition
This financial data report is very useful for providing an assessment of the financial condition of a company’s business. The purpose of assessing the financial condition of this business itself can be likened to when a company’s financial record report has a lot of losses, so that indicates a company is experiencing a setback.
However, when there is so much profit data in the financial report, it will give a sign of where the company is developing. By knowing how the financial assessment of a business is, the leader can determine the right steps, for example, wanting to continue the business or closing the business because it has experienced a large loss.
2. Can be used as material for evaluating
As we explained earlier, when preparing this financial data report, it is used as evaluation material. Therefore, when there is no report on the company’s business financial data, the evaluation that will be carried out by a company will not run optimally, even the company will only carry out evaluations that are useless.
All reports that have been done by an accountant are an evaluation parameter to explain a problem as well as how to solve it. If the company experiences setbacks, it can be known what is the cause of the setback and what is the way out. Then the evaluation carried out in the next period will focus more on solving the problem so that it does not recur.
3. As a Form of Corporate Responsibility
Making financial data reports for a company also has a purpose as a form of corporate responsibility. For this accountability itself both to an investor and to the government related to taxes and others.
If the company’s financial data report is carried out in detail, then the company can be said to be a company that is credible or has a good image in front of shareholders.
This will provide evidence if the management in the company is running well according to their respective portions. respectively.
However, if the company’s financial data report displays messy financial reports, then a shareholder will immediately assume that the company is not credible and will experience a high potential to experience problems in the future.
4. It’s easier to monitor the performance of company staff
The information contained in this company’s financial data report can also be a representative of how the performance of some of the company’s staff is.
With this report, companies can assess whether their staff has carried out the work that was given properly and correctly or the work that was given to the star was not executed properly.
This can be seen from how the financial data report in a company. Therefore, a company’s financial data report must be carried out by someone who is competent in the field with full responsibility so that the preparation can be more accurate.
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5. Can Maximize Work Productivity More
In a company’s financial data report, you can see accurately how the level of transactions that occur in the company. Therefore, with the help of this company’s financial data report, it will help the company determine how the task of achieving the target desired by the company will be easier.
This will also help make it easier for the company to maximize the performance and productivity of all parties involved with the company.
Having an accurate company financial data report will assist management in determining a more accurate and detailed job desk for each company staff.
If the job description given is more detailed, it will make the performance and productivity of the company’s staff more optimal. Employee performance appraisal applications can be used by companies to assess how active employee productivity is.
When a company wants to run a business, the owner of the company should have extensive knowledge about the business and the activities within it, one of which is the process of making financial reports for this service company.
As you already know for sure, finance holds the most important element in the business world because by looking at how the company’s financial condition from the reports that have been made will be visible and will determine whether the business or business that is being carried out develops or vice versa.
Therefore, to facilitate the process of recording business transactions from companies while minimizing the occurrence of errors when inputting data, an accountant should use an online accounting application . With the help of accounting applications, of course, all work will be faster, automatic, and more accurate.