Financial Reports that Companies Must Have

Understanding Accounting


Nowadays, who is not familiar with accounting terms? Since attending school or college, we have often heard this term, right? Even among business people, the term accounting is very familiar and attached to daily life in the company. So what is the meaning of accounting? Accounting is a field that deals with financial data processes and their supports such as searching, collecting, recording, analyzing, interpreting, making reports and even making policies related to financial data from parties who need it. Or it can be simplified with a systematic and detailed recording process of a business's financial transactions.


The Role of Accounting for Companies


1. Business Analysis


Accounting data is processed and used as analysis of company performance. Accounting data reflects a company's financial performance, so it can help understand what is happening to the company and compare current data with previous data. The more accounting data, the easier it is for analysis to identify small problems before they become big problems for the company.


2. Business Planning


By using data from the previous period, the company will make the best possible budget and plan for the business needs of the future period. This data is used starting from sales and profit projections, evaluations, making budget proposals, next business planning, negotiations, to reviews and approvals.


3. Liaison with Third Parties


Accounting data functions as a bridge between companies and third parties to make decisions regarding cooperation, buying and selling processes, investments and other transactions. Accounting data provides information to vendors or investors to facilitate decision making regarding the company. Of course, this makes sense because investors will not invest without up-to-date and accurate financial information. Accounting is also a liaison between companies and the government in terms of tax reporting and audit processes.


4. Making Investment Decisions

give companies consideration when making external investments. Companies usually use accounting data to determine how to invest. From the results of the company's financial analysis, it will be seen how much cash is needed in the short term and long term. Once this has been determined, then shares, bonds or investments will be selected which are suitable for storing the cash for the required time period.


Financial Reports that Companies Must Have


             1. Cash Flow

Cash flow or also known as cash flow is an important component that is part of a company's financial reports. Cash Flow contains information regarding the movement of money in and out of a business, such as the effect of cash from operating activities, investment transaction activities, financing/funding transaction activities, and the net increase or decrease in a company's cash during a certain period.

2. Profit and Loss Report (Income Statement)

The income statement contains data on income as well as expenses borne by the company. Having a company's profit and loss report can help find information about whether the business was profitable in a certain period or vice versa. So that later you can make the right business decisions in the future.

3. Financial Balance

The financial balance shows a company's ability to pay its debts and obligations, which is seen from the total amount of assets. The company's financial position in a certain period can be seen through this report.

In preparing the financial balance, it is done by recording the company's assets, liabilities and equity. Share capital can also be seen from this type of financial balance or balance sheet. Such as share premium and disagio, issued capital, as well as initial capital owned.

4. Capital Change Report

All increases or decreases that occur in capital in a certain period can be found through this report. You can find out by looking at the ending balance which increases or decreases compared to the initial balance.

presents changes in equity during 1 accounting period. This report consists of several elements including capital at the beginning of the period, additions and subtractions during 1 period, and capital at the end of the period

This report functions as a tool to monitor the company's financial progress and setbacks.


The Role of SAP in Company Financial Reports


The Financial and Accounting modules in SAP provide improvements in financial management in a company. Because of course every business wants to make a profit by maintaining proper financial management. SAP is also an Integrated System where this system is able to automate the entire business process for each division of the company.

The SAP Finance and Accounting module also helps companies to produce financial reports such as balance sheets, profit and loss reports, and also analysis reports that a company must have. Apart from that, it has a sub-module in the form of a ledger which can record all company transaction data in the chart of accounts. SAP is also used to record customer receivable transactions and manage customer accounts. You can also post invoices, credit memos, advances, invoice payments, execute customer reports, and so on.

That's the discussion regarding the Financial Reports that a Company must have. By using SAP it is hoped that the company's profitability will increase. As well as being easy, fast, accurate, minimizing system errors in a company's financial management so as to minimize losses in a company.