Profit Concept Of Accounting

Profit Concept Of Accounting

The financial statements are useful for the administrative group of the entity.

1. What is Financial Statements?

Financial statements are reports and documents with economic information , from an individual or entity. Also known by the name of financial statements , these reports expose the economic situation in which a company finds itself , as well as its variations and evolutions that suffer during a determined period of time .

The financial statements are usually useful for the administrative group of the entity , analysts and third parties that fulfill an investor role with it (shareholders, owners).

In different countries, the concept of financial statements takes on another name:

• In Argentina they are known as balance.
• In Colombia some financial statements are called Financial Balance.
• In Spain they receive a totally different name, Annual Accounts .

See also: Profitability .

2. Statement of financial position or balance sheet

The asset is made up of the economic assets of a company.

This is a financial report that highlights the economic situation of an entity at a specific time in its life . This element is made up of three widely used concepts in the financial statements: assets, liabilities and equity:

• The asset : It is made up of the economic assets of a company, documents with date of work and all types of expenditures that give a future benefit to that company; in an accounting balance the asset is within the credit.
• The liability : It is any debt or commitment acquired by a company for its own financing or for third parties; in an accounting balance the liability is within the debit.
• Net worth : The NP is the residual resources of the asset, after deducting the liability. The net worth is then calculated using the following equation:

Active - Liabilities = Net Worth

3. Income statement or statement of profit and loss

Here it is reflected how it was that the result of each exercise was achieved in a specific time in an orderly and detailed manner.

This document is of vital importance for each company and its realization consists of obtaining the expenses and income of specific and separate categories , in such a way that results can be obtained. The result varies if it was obtained before or after taxes.

4. Statement of evolution of Net Worth

The evolution of the net assets shows the changes and variations of the company.

This financial statement is one that provides information of vital importance with respect to the size or amount of Net Worth that a company has and its different variations or changes over time. These variations or changes are consequences of different actions:

• Transactions made with the owners, third parties or shareholders.
• The surplus achieved or also positive gains that increase the Net Worth of a company.
• The deficit or losses that cause an abrupt decrease in the Net Worth of a company

5. Cash flow statement

This accounting statement is present in all companies and is intended to inform the different variations, changes and movements of cash .

The usefulness of the information provided by this financial statement lies in showing managers the capacity that the company has to generate cash or equivalents. The decision by users is totally related to the results offered by this financial statement.

We explain what are the financial statements and what are the functions of these reports. In addition, some of its main characteristics.

The financial statements are useful for the administrative group of the entity.

1. What is Financial Statements?

Financial statements are reports and documents with economic information , from an individual or entity. Also known by the name of financial statements , these reports expose the economic situation in which a company finds itself , as well as its variations and evolutions that suffer during a determined period of time .

The financial statements are usually useful for the administrative group of the entity , analysts and third parties that fulfill an investor role with it (shareholders, owners).

In different countries, the concept of financial statements takes on another name:

• In Argentina they are known as balance.
• In Colombia some financial statements are called Financial Balance.
• In Spain they receive a totally different name, Annual Accounts .

See also: Profitability .

2. Statement of financial position or balance sheet

The asset is made up of the economic assets of a company.

This is a financial report that highlights the economic situation of an entity at a specific time in its life . This element is made up of three widely used concepts in the financial statements: assets, liabilities and equity:

• The asset : It is made up of the economic assets of a company, documents with date of work and all types of expenditures that give a future benefit to that company; in an accounting balance the asset is within the credit.
• The liability : It is any debt or commitment acquired by a company for its own financing or for third parties; in an accounting balance the liability is within the debit.
• Net worth : The NP is the residual resources of the asset, after deducting the liability. The net worth is then calculated using the following equation:

Active - Liabilities = Net Worth

3. Income statement or statement of profit and loss

Here it is reflected how it was that the result of each exercise was achieved in a specific time in an orderly and detailed manner.

This document is of vital importance for each company and its realization consists of obtaining the expenses and income of specific and separate categories , in such a way that results can be obtained. The result varies if it was obtained before or after taxes.

4. Statement of evolution of Net Worth

The evolution of the net assets shows the changes and variations of the company.

This financial statement is one that provides information of vital importance with respect to the size or amount of Net Worth that a company has and its different variations or changes over time. These variations or changes are consequences of different actions:

• Transactions made with the owners, third parties or shareholders.
• The surplus achieved or also positive gains that increase the Net Worth of a company.
• The deficit or losses that cause an abrupt decrease in the Net Worth of a company

5. Cash flow statement

This accounting statement is present in all companies and is intended to inform the different variations, changes and movements of cash .

The usefulness of the information provided by this financial statement lies in showing managers the capacity that the company has to generate cash or equivalents. The decision by users is totally related to the results offered by this financial statement.