Financial statements will help you in how you should manage your company, and the accuracy of the financial statements is very important before financial analysis. The data in the trial balance should be accurate and the income and expense figures should be accounted for in the required accounts.
For us to manage our company correctly, the financial statements we produce must be accurate and in line with the Roadmap of Ind AS Implementation in India.
While defining, recording, classifying, and summarizing the financial transactions realized in the business constitutes the primary importance of accounting, analyzing and interpreting the situation summarized in the financial statements and communicating it to the relevant parties also expresses the second importance of accounting.
The tables in which the information gathered by the accounting and classification are summarized to enable the parties related to the business to be used for various purposes, are called “financial statements”.
Financial statements are a system for measuring the results of business activities and summarizing them in a way that can be understood by the parties involved in the business. Financial statements are tools that ensure that the information recorded and classified in the accounting system of the enterprise is transmitted to those who need and will use this information at certain intervals.
Financial statements aim to provide information about an entity’s financial position, financial performance, changes in financial position, and cash flows for the benefit of various users when making economic decisions.
For financial statements to present reliable information, certain rules must be followed during their preparation. Because obtaining the expected results from the analysis of the financial statements depends on the fact that these statements reflect the truth.
The fact that the financial statements reflect the truth can be ensured by certain rules. These rules can be expressed as the basic concepts of accounting, accounting principles, and Ind AS Implementation in India, which constitute a framework for the preparation of financial statements.
Interpreting the Financial Statements, on the other hand, is to present the meaning of the different percentages, amounts, and ratios obtained because of the analysis, together with the reasons, and to reach a conclusion according to the findings. For financial statements to be interpreted, it is necessary to have good accounting knowledge as well as the ability to interpret.
What is important in the analysis of financial statements is the evaluation of the basic economic and financial situation of the enterprise and the results of its activities.
The main purpose of analyzing the Financial Statementsisto know the:
- Liquidity of the Business
- Operating Efficiency Status of the Business
- Financial Status of the Business
- Profitability Status of the Business
It is to reach the findings of the situation, make comments based on these findings, determine the positive and negative aspects of the situations in question, and develop solution proposals.
So, does your company follow the Roadmap of Ind AS Implementation in India or are you still unaware of this important issue? Turn to the specialists to ensure that your business is on the right path.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
Posted by
Aman Aggarwal
AKGVG & Associates