Financial Report preparation process

Financial Report preparation process

As a commodity, financial statements are produced by the management, whose usefulness will be consumed by many parties, must be presented in certain ways and procedures based on a valid guideline. Thus, presentation of financial statements can not be operational without following the rules. And the implementation of accounting records should include the entire activities needed to provide management of various information for the planning, control and reporting of the State and operation of the company.

The financial statement is essentially a summary of the entire activity that can increase or decrease the company's assets, liabilities, and capital during a certain fairy ode. The presentation process consists of two stages. The first stage is called the recording phase while the second lava is the stage of the enriching (summmarizing phase).

Each stage is interconnected and cannot precede one another because it is impossible for financial statements to be compiled without any activity. These stages are known as accounting process terms or accounting cycles. At the recording stage, there are three steps traveled, namely:

A. Analysis or transactions and other selected events are not all transactions will be recorded, but must be made a selection of an incident, whether to be recognized in the financial statement or not. After that the Tcrselect transaction is documented, will be the basis of creating the original record of each transaction.

B. Transaction logging. Based on the documents above, each transaction is recorded sequentially (chronologically) in the diary. Diary used can use a special diary or a general Diary

C. Transfer of transactions into the ledger. After each transaction is recorded in the diary, then inserted into the appropriate accounts on the general ledger and supplementary books.

Furthermore, at the stage of the Enrichation, the series of steps are:

A. The remaining balance sheet of the general ledger accounts. The remainder balance sheet presents a summary of the information classified in the ledger, and is also a general correction of the accuracy of recording and transferring to the ledger.

B. Adjustment of multiple accounts for the corresponding date.

Before financial statements can be compiled all information that is accountable and not recorded must be established. Adjustments must be recorded (on paper) so that the accounts will be in accordance with the circumstances in question before the preparation of the financial statement is executed.

C. The preparation of a statement report of the Intormasi on the overview of activities on the work paper including changes in the financial position will be the basis for the financial statements for the current period.

D. Closing of temporary accounts. All balances of the inventory account (if the company uses the periodic inventory system), diutup the relevant accounts ' "and then transferred to the owner's property account.

E. Remaining balance sheet after closing. Done to adjust the similarity between the debit and credits after bookkeeping verses adjustment and cover.

F. Reversal of certain accounts. This step is not to be pursued, but it is often necessary as a way to facilitate the recording and adjustment of the next period. The accounts are suspended (deferred items) and accounts anticipating (accured items).

These procedures are a complete cycle that is usually implemented in each fiscal period.

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