Preparation of Annual Financial Report

Business owners decide to form a corporation because it enables them to opt for a professional business structure and they can also take advantage of some liability and tax benefits. However, there are certain requirements that have to be met when corporations are established such as having a board of directors, holding annual meetings and filing annual financial reports. The purpose behind financial report filing is to show the current information and position of the business. These reports typically contain the balance sheet of the business, its income statement and also a statement of cash flows.

Here are some instructions that can help in making these documents for completing the financial report:

1- Determine the time period for which the financial statements have to be prepared. For instance, if you wish to prepare a balance sheet as at May 31st, 2012, you may want to prepare a statement of cash flows and an income statement for the year June 1, 2009 through May 31, 2010.

2- The general ledger should be reviewed to ensure all items have been correctly posted. Any errors should be corrected before the income statement and balance sheet. It is also a good time to make note of all non-cash flow expenses such as amortization and depreciation.

3- The balance sheet should be prepared. All the assets, liabilities and equities should be listed in their dollar amounts using the trial balance. The sum of total assets should be equal to the sum of total liabilities and total equity.

4- A classified balance sheet should be created by separating assets into different categories like fixed assets, current assets and other assets. Likewise, liabilities should also be categorized into short term and long term liabilities.

5- Now is the time to prepare the income statement. The total of all income should be recorded using the trial balance and allowances and returns should be subtracted. The cost of good section including direct material, labor, purchases and other job costs should be prepared. Arrive at gross profit by subtracting cost of goods sold from net sales. List all expenses and deduct them from the gross profit to arrive at profit before tax.

6- Retained earnings should be reconciled per the balance sheet and income statement. This is the combination of profit from previous years with that of the current year profit or less current year loss as well as less distributions and capital contributions.

7- Prepare a cash flow statement by categorizing the movement of cash inflow and outflow in different sections including operating, financing and investing activities.

Once the report has been prepared, it has to be submitted to the appropriate authorities from where it can be obtained by interested parties. The problem is that a Certified Public Accountant has to prepare this report in most cases. You can hire accounting services that offer you financial statement preparation as well as financial report filing at affordable rates.

If you need an accounting service to help prepare annual financial report in Singapore for you, Shkoh is the best help you can get. 

Posted by Waqar Hassan on April 25, 2015 on the website Sooper Articles. Reprinted in terms of the source site’s copyright allowances.

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