In: Accounting
After the trial balance is prepared, the business owner can prepare the financial statements. List and discuss the purpose of each financial statement, the order in which the financial statements are prepared, and the information included in each financial statement (information in the back of Chapter 3).
In addition, consider the fact that many people feel that financial statemets should be expanded beyond the traditional components (income statement, statement of owner's equity, statement of cash flows and balance sheet). Should finanical statements be expanded to include a company's ecological and social performance?
The following 4 statements are the basic financial statements prepared after trial balance is completed
1. Income Statement -
2. Balance sheet
3. Statement of Changes in Equity
4. Cash Flow Statement
In addition to above, Financial statements include Notes to Accounts and Supplementary schedules
In today's changing world, it is necessary that the financial statements should just not provide finanacial data. The companies should disclose its ecological and social performance. This is necessary not onlly to keep the companies ecologiclly and socially responsible it also gives a non-financial view of the company to the readers of financial statements. There are certain non monetary factors necessary to determine whether the company is doing good work ecologically and socially. These reports ensure that the company is not exploiting ecological and social factors to maximise financial gains. Hence reporting of ecological and social performance of the company is also essential.