According to the Law “On Accounting N 113-XVI” of the Russian Federation, adopted in 2007, it is obligatory to organize the preparation of financial statements, which are an integral part of accounting, at the enterprise. These requirements apply to all organizations and enterprises registered in the Russian territory.
The benefits of financial reporting
The state, not without reason, pays great attention to this issue. After all, regular and continuous preparation of financial statements provides timely and error-free tax calculation and payment to the budget. Which in turn contributes to the successful functioning of non-manufacturing structures. So, the state itself is developing and gaining strength.
In addition, the systematic correct preparation of financial statements contributes to the systematic and successful development of entrepreneurial activities of the company, which, together with other enterprises, has a positive impact on the development of the entire economy of the country as a whole.
Having the opportunity to see the calculated financial result on a monthly basis , including the processing and systematization of the numerical data of all economic and financial operations carried out for this period in monetary terms, the director of the company is able to correctly assess the financial condition of the company, as well as plan further actions to promote its business project.
What is financial reporting?
Financial statements - a systematic set of monetary results that characterizes the financial position of the company for a certain period. It is compiled with the help of plan accounts in accounting tables, order books or other registers and contains financial indicators about the movement of goods or products, property, securities, as well as various, including tax, obligations.
The usefulness of financial statements is determined by a set of specific indicators. The main elements of financial reporting are groups or sections of accounting, such as assets, equity, liabilities, expenses, income, loss and profit.
The company's equity, assets and liabilities are indicators of available property and cash from the company, as well as sources of financing in the reporting period. The remaining elements reflect financial and business operations that caused changes in both equity and assets and liabilities. The reflection of changes in monetary form in all these elements is made using the appropriate reporting forms.
Financial reporting forms
Using report types is advisory. Therefore, forms can be developed by the organization independently. PBU 4/99 sets out the general provisions and requirements for them. When preparing financial statements, the following types are used:
- report on changes in fixed and working capital ;
- the balance sheet of the enterprise;
- report on the targeted use of funds;
- report reflecting the movement of financial assets;
- an appendix to the balance sheet;
- a report on financial results characterizing profit and loss.
It is also worth noting that small businesses that are not required to carry out an audit of the financial statements do not submit financial statements in the form of N 3 (statement of changes in equity), in form N 4 (statement of cash flows), in form N 5 (Appendix to the balance sheet) and an explanatory note. Of all the above forms, the main one is the loss and profit statement, as well as the balance sheet.