7 Methods of Making Financial Statements

Financial statements are an important thing in a business or company. This is because to know the progress of a business must be seen from the results of company transactions. For those of you who have a business business, you must also know how to make financial reports.

So it's not just the team Finance only those who know the method of making financial statements. Anyone who already earns must know it, especially if you do have a business in any field.

Come on, find out the method of making financial reports here!

What is the method of making financial statements?

Before entering into the method of making financial statements, you must first know that in financial statements there are several types, namely cash flow statements or cash flow statementscash flow, income statement, balance sheet, and statement of changes in capital.

Here, 7 methods of making financial statements:

1. Record all company transactions

To make financial reports, the first thing you have to do is collect all evidence of company transactions and record them in the financial statements.

Proof of this transaction is not only proof of sales made by the company, but can also be in the form of purchases or rental payments made by your business. 

Proof of transactions can also be in the form of notes, receipts, receipts, invoices, or other evidence. All transactions must be recorded in detail.

2. Prepare a trial balance

The next method for making financial statements is compiling a trial balance, namely to record a list of debit and credit balances from the company. A trial balance is prepared prior to the preparation of adjusting entries.

Thus, this trial balance becomes the first stage to make adjusting entries. Then, the trial balance is also useful for checking the balance of debits and credits.

3. Input into the ledger

After recording and collecting proof of company transactions, you caninput or topostsit to the general ledger, where this ledger will contain the details of each company account.

4. Make adjusting entries

After knowing and making a trial balance, the next thing is to make adjusting entries.

This adjusting journal will contain related transactions at the end of each company period and usually the adjusting journal also contains reports on transactions that have not been recorded or also transactions that occur at the end of the period after the trial balance.

5. Prepare a work sheet

Worksheet or worksheet is a report that has been adjusted from the trial balance to the adjusting journal.

The adjusted balance will later be seen in the trial balance column. In addition, these financial statements will be recorded in the income statement.

6. Preparing financial statements

After you have worked on the five points above, you can immediately start compiling financial reports, through the work sheet you can actually compile financial reports.

7. Make closing journal

Compiling financial statements is not the end of the financial statement method, you must close all accounts in the adjusted ledger. The nominal account will be transferred to the profit and loss nominal which will later be transferred to the unshared profit account.

You can also make financial reports more easily now, because there are many or accounting support applications that you can use to make business or personal financial reports.