Financial statement

Good morning steemalive,

Hi everyone, am back with another business post but the deeper version, which is Financial planning or as I like to say accounting, today's post will be as essential as other post I have shared may be more, so a quick advice pick up your pen let's start relating it our lives.

First I will be starting with 4 reasons why we need accounting which are;

1. Accounting shows the proof of financial position of a business
2. Accounting helps, business owners, business head, board of directors to make decisions
3. Accounting helps to show effective stewardship [Accountability] of employees.
4. Accounting is a tool to ascertain taxes to be paid by a business to the government.
   Now we can see a little point about the importance or why accounting is needed we can shift into the main topic for today.

Financial statement
Financial statement is been defined as a vehicle, or means of communicating information on the resource management(effective usage of assets), obligations to be paid(liabilities), and the performance report of the the organization or entity to interested parties(investors). Accounting information is contained in the financial statement.

Purpose of a Financial statement

• The number one purpose of a Financial statement is to ascertain the Financial position of a business to interested parties.

• It shows operations been carried in a given period with their monetary value attached, and this help user make decisions.

Rules guiding financial statement

We have two rules guiding financial statement they are both called accounting standards and they are:

Source

1. Local standard
   Local standard are rules setup by an accounting standard body, FRCN [ Financial reporting council of Nigeria]

2. International standard are standards a cross different nations, IASB [ International accounting standard bord] and [ International Financial reporting standard ]

If your enjoying the keeping reading to know more 😁 😁😁, about the accounting world, so self employed people like us steemians can handle our business properly and attract investors.

source

Components of a Financial statement in Nigeria

• Balance sheet rather known as statement of financial position

• Profit and loss account rather known as income statements
• Statement of cash flow
• Value added statement
• 5 years financial summary
• Statement of accounting policies, and finally
• Note to the account.

Just to be clear, IFRS is made up of IAS [ International accounting standards ] and their purposes they are,

• Statement of Financial position
To provide information on the financial position of a business on a given date and at a a particular time or period, total assets equals to total liabilities, here is the shocking part, steemians you are aware of the #club5050checker it operates with this principle.

• Statement of profit and loss and other comprehensive income
To display the performance of an organization over a given period, it is a report showing the activities of a company and if it brought profit or a loss, remember a standard accounting period is a period of 12 months.

• Statement of changes in equity [SOCIE]
It associates itself with all activities that relate with the business and owners of it.

• Statement of cash flow
It deals with the inflow and outflow of cash in a business.

• Statement of accounting policies and explanatory note
Explanatory notes provides detailed information of the pieces of information contained, it simply means that each information in every segment above is been summarized into a note for proper understanding of information.
If this post thought you one or two places kindly comment, upvote, share and follow up for more, your business lecturer @jammyroberts.