KIMBWETA FINANCIAL STATEMENT

FINANCIAL STATEMENTS Are reports prepared by a company’s management to present the financial performance and position at a point in time. Also are written reports which quantitatively describe the financial health of the company. The aim of financial statements is to give users more information about the company (performance and position) Also are the main sources of information for most decision makers.

TYPES OF FINANCIAL STATEMENTS Comprehensive income statement (trading, profit and loss account) Statement of financial position (balance sheet) Statement of owners equity Statement of cash flow. Always financial statement are prepared annually or quarterly.

USERS OF FINANCIAL STATEMENTS Shareholders Government agencies Banks and creditors Investors Management and employees Public and customers Now let see on how to prepare the financial statements;

COMPREHENCIVE INCOME STATEMENT This is used to calculate profit or loss of the company. Also the income statement shows the revenue and expenditure of the company over a period of time. *TERMS GROSS PROFIT = sales-cost of goods sold(COGS) COST OF GOODS SOLD=cost of goods available for sale (COGAS)-closing stock COGAS=opening stock+purchases+carriage in wards-returns outwards NET PROFIRT = gross profit+any other income-expenses FORMAT OF COMPREHENCIVE INCOME STATEMENT

NOTE 1 This note represents all kind of expenses like; Carriage outwards Advertising Sundry expenses Depreciation Provision for bad debts Discount allowed Electricity charges. And any other expenses of the company

STATEMENT OF FINANCIAL POSITION statement of financial position/ balance sheet; refers to the statement showing the list of assets, capital and liabilities of a company for a specific period of time. In the balance sheet the equation used is that of: A=C+L where A= assets C= capital L= liabilities

ASSETS CURENT ASSETS This includes Cash Bank Stock Debtors And any other asset that stay for a short period of time. NON-CURRENT ASSETS Land & buildings Motor vehicle Machines Furniture & fitting And any other asset that can stay for long usually one year

CAPITAL & LIABILITIES CAPITAL refers to money or goods used for starting a business. when there is no liabilities in a business, ASSETS=CAPITAL LIABILITIES NON-CURRENT LIABILITIES; Loan from NBC Debentures CURRENT LIABILITIES Creditors Bank overdraft

Statement of financial position is used to show the position of the business while statement of comprehensive income is used to show the performance of the business FORMAT FOR STATEMENT OF FINANCIAL POSITION

FINANCIAL STATEMENTS Drawings; are money or goods taken out of the business by proprietor for personal uses. Debenture; this is the document that shows the long terms obligation of the company. Note Depreciation are deducted from the assets in the balance sheet Provision for bad debts also are deducted from the amount of debtors in the balance sheet

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SOLVED EXAMPLE KIMBWETA FINANCIAL STA TEMENTS

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