A basic accounting statement pinpoints the accounting basics of a business firm by putting together its liabilities, balances, assets and equities into one whole organised format. It is accredited by a reliable accountant who has a strong information-base about the company’s fiscal events. It must be sealed after proper verification of the results.
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Sample Basic Accounting Statement
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Name of the organization: Deccan Garments
Years of rendering service: 13 years
This accounting statement is a prototype of the firm’s yearly business policies. The values presented here are ballpark amounts of the actual financial items covered in the observation.
Principles on which the statements are made:
- Revenue recognition principle
- Matching principle
Outline of the Basic Accounting Statements
1. Income statement:
The income of the company has been approximated by trapping the revenue and expense information at the time of final possession. The present revenue status is $60, 000 for the delivery and sale of garments whereas the expense status is around $20, 000 for transportation of items.
2. Balance Sheet
The balance comprises of the financial components namely assets, liabilities and shareholders’ equity. The company resources are in a sound position wherein the assets are equal to $50, 000 (insurances, depreciation and prepaid inclusive), obligations being almost negligible owing to minimum loan borrowed, and absence of stockholder’s equity (sole entrepreneurship).
3. Cash flow Chart
The financial output of the firm is represented partly by the cash flow cumulating to form the total profitability index. The double entry system shows that the cash flow has remained steady through all situations due to effective management.