What are the main components of a financial statement?
June 20, 2023 | 30,00 EUR | answered by Louis König
Dear Tax Advisor,
my name is Selma Busch and I am the managing director of a small to medium-sized business. I am currently facing the challenge of preparing our annual financial statements for the past financial year and I am unsure which components must be included in the statements.
So far, we have only prepared the income statement and balance sheet, but I am wondering if this is sufficient to create a complete and meaningful annual financial statement. I am concerned that we may overlook important key figures and information that are crucial for analyzing the financial situation of our company.
Could you please explain to me which components must be included in a company's annual financial statements and why they are so important? Are there any additional documents or information that we should consider in order to obtain a comprehensive overview of the financial position and economic development of our company?
I am very grateful for your support and expertise in this matter and look forward to hearing from you.
Best regards,
Selma Busch
Dear Mrs. Busch,
Thank you for your inquiry regarding the annual financial statements for your company. A complete and meaningful annual financial statement is crucial to provide an overview of the financial position and economic development of your company. In addition to the income statement and balance sheet, there are other components that should be included in the annual financial statements.
The most important components of an annual financial statement include the income statement, balance sheet, notes, and management report. The notes provide additional information on the balance sheet and income figures, which are important for a better understanding of the company's numbers and developments. The management report, on the other hand, provides information on the economic situation of the company, the risks and opportunities, the development of the company, and important events in the past financial year.
Furthermore, the cash flow statement and statement of changes in equity should also be part of the annual financial statements. The cash flow statement shows how the liquidity-relevant inflows and outflows developed in the past financial year and provides insight into the financial stability of the company. The statement of changes in equity, on the other hand, shows how the equity changed during the year and provides important information about the company's financing structure.
In addition to these components, possible disclosures regarding the statement of comprehensive income, segment reporting, ownership interests, and deferred taxes should be considered to obtain a comprehensive overview of the financial situation of your company.
It is important that all relevant information is included in the annual financial statements to conduct a thorough analysis of the financial position and economic development of your company. A complete annual financial statement helps in making important decisions for the future of your company and identifying potential risks early on.
I hope this information is helpful to you, and I am available to assist if you have any further questions. Thank you for your trust and cooperation.
Sincerely,
Louis König
Tax Advisor
