When are financial statements produced for your organization and the process of preparing the financial statements Financial statements in my organization are prepared through the following process; Balances in the individual accounts are posted into the trial balance and the accountants ensure that the trial balance balances. The entries in the trial balance are used to produce a worksheet which should balance Entries that might not have been captured in the worksheet (adjusting entries ) are entered into the worksheet After adjusting entries have been made in the worksheet, the financial statements are made from the worksheet using information contained in the ledger accounts. The financial statements are prepared in the following order; -income statement -Statement of retained earnings -Balance Sheet -Cash flow statement In my organization, the above financial statements are prepared at the year-end which is on 3rd June of every year.
My company is BHP Billiton. The following are the users of accounting information in my organization; Internal users include Management – used for analyzing performance and hence take appropriate measures to improve company results Employees – for assessing the company’ s profitability and its effect on remuneration and job security Owners – for analyzing the viability and profitability of investment and decide the future course of action External users include Creditors-determine organization creditworthiness Tax authorities – determine the credibility of tax returns Investors – Analyze the feasibility of investing in the company Customers- assess a firm’ s financial position Regulatory authorities – ensuring compliance with regulations on reporting by the company. Profit center – this is because a profit center incorporates both a cost center and a revenue center.
A work team may be a cost center in that they may be offering services to the firm which does not necessarily lead to revenue but are necessary.
It can also be a revenue center if it generated profit for the firm. Examples of assets and liabilities Assets Cash Debtors Motor vehicle Equipment Liabilities Creditors Bank loan Accrued expenses Bank overdraft Examples of revenue and expenses Revenue Sales revenue Rental income Interest revenue Service revenue Expenses Rent expense Salary and wages Insurance expense Advertising expense Rolling Pebbles Balance Sheet As of 31st December 2013 Fixed assets Land and Buildings $85,000 Furniture and fittings $30,000 Shares in Beetle $30,000 Total fixed assets $145,000 Current assets Cash at bank $40,000 Accounts receivables $6,000 Merchandise $47,000 Total current assets $93,000 Total assets $238,000 Current Liabilities Accounts payable $20,000 Total current Liabilities $20,000 Long-term liabilities Mortgage $30,000 Total long-term liabilities $30,000 Total liabilities $50,000 Owner’ s equity Capital $95,000 Profit $93,000 Total owners’ equity $188,000 Owner’ s equity and Liabilities $238,000 Rolling Pebbles Income statement For the period ended 31st December 2013 Sales $200,000 Appearance income $60,000 Total income $260,000 Cost of goods sold $50,000 ($50,000) Gross profit $210,000 Expenses Advertising $10,000 Interest on loans $70,000 Petrol and oil $1,500 Rent $2,000 Electricity $1,500 Wages $30,000 Total expenses ($115,000) Net profit $95,000 Types of budgets prepared in our organization include capital budget, cashflows, balance sheet, and income budget.
The budget process is triggered by the accounting department which prepares worksheets aimed at helping department heads in preparing departmental budget estimates. The finance manager then calls all departmental managers to a meeting where they present and discuss their estimates for the following year’ s projected activity levels. After this, the departmental managers together with finance manager prepare their departmental estimates for the coming year.
ReferencesJared, N2010,Financial accounting, London, Rutledge.