Four ways to improve your financial statements

Financial Statement

Financial Statements represent a formal record of the financial activities of an entity. These are written reports that quantify the financial strength, performance, and liquidity of a company. The financial statements are used by investors, market analysts, and creditors to evaluate a company’s financial health and earnings potential.

How to enhance the usefulness of your financial statements

  1. Consider the format of your financial statements. This tiny detail can make a tremendous difference. Providing investors with easy-to-read financial information in the financial statements is essential to achieving your objective of capable, confident, and well-informed investors.
  2. Make sure to include an operating and non-operating presentation. It is important to consider the effects of both operating and non-operating components of the income statement. Due to the material nature of non-operating items, they are typically reported separately from operating items in a company’s financial statements.
  3. Review peer organizations’ financial statements for best practices. A review of other organizations’ financial statements is a great place to start when updating your own.
  4. Modify your footnotes. Financial statements are easier to read and understand when you identify what information is relevant to your investors, prioritize it appropriately, and present it in a clear and simple manner. In some cases, this includes additional information that is useful for investors and, in other cases, removing information that is immaterial.

Financial statements are intended to provide investors with information that is useful for making investment decisions. These statements need to be updated annually and should be prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP)

Contact Georgen Scarborough Associates today for information on how we can help you with your financial statements. 

Business accounting strategies for bank reconciliation

Bank reconciliation

Bank reconciliation is what happens when your business needs to prove or document its account balance. It is the comparison of your monthly bank statement to your internal accounting records. Sometimes these balances do not match and the business needs to identify the reasons for the discrepancy and reconcile the differences.

How to deal with discrepancies when doing bank reconciliation 

There are three reasons why your bank statement and accounting records might disagree. 

  1. Omission. This refers to transactions that appear on the bank statement, but have not been recorded in the accounting records. Such as a customer payment that has bounced, interest received, bank charges and bounced checks. The difference needs to be eliminated by adjusting the company’s accounting records before the preparation of bank reconciliation.
  2. Timing differences. This refers to transactions that are recorded in the bank statement and the accounting records in different periods. For example, an outstanding check which you send to your supplier, but it doesn’t get cashed until the following month. Another timing difference is a “deposit in transit” which is used to categorize monies that have been received but have not yet cleared the bank. Keep track of timing differences that may otherwise cause difficulty in reconciling the company’s cash balance on its financial statements to its monthly bank statements.
  3. Errors. The last reason is accounting errors such as missing receipts, making an entry twice, entering the incorrect number, and neglecting to add interest earned. The best way to correct errors in accounting is to add a correcting entry. A correcting entry is a journal entry used to correct a previous mistake.

For assistance with your bank reconciliation, contact Georgen Scarborough today. Georgen Scarborough is a full-service accounting firm that can customize a suite of accounting and financial management services, such as bank reconciliation, tailored to your needs.