Financial Statements Singapore
Purpose of Financial Statements in Singapore
The Accounting Standards Council ASC in Singapore believes that the financial statements purpose is intend for the use of economic decisions makers. These decisions like determine when to buy, hold or sell an equity investment, judge the stewardship or accountability of management, evaluate the ability of the entity to pay and afford other benefits to its employees, consider the security for amounts loan to the entity, regulate the activities of entities, issue profits and dividends, deduce taxation policies and compile national income statistics. However, financial statements of a private or small entity could meet their primary objective in providing information regarding the entity’s financial position, performance and cash flows. An entity’s financial position can compute total entity’s Equity by using a formula where by its Assets less its Liabilities. An asset is a tangible or an intangible resource managed by the entity that generates cash inflow to the economic benefits of the entity. A liability equals entity current obligation or debt that result an outflow of cash or cash equivalents from the entity’s benefits; like a bank loan. This statement tells what the entity owns and we called it Balance Sheet. Performance we analyse, whether an entity is profit-making with its data of Income vs Expenses. Income contains revenue and gains, like sales, fees, interest, dividends, royalties and profit from selling property or shares. Expenses, which contain cost of sales, remunerations, depreciation and tax, are incurred cost and can even be losses from selling property or shares. These statement summarizes entity’s profit and loss, which is their Income Statement. Cash flow we review, how the entity gets and uses their cash flow from Operating, Investing and Financing activities. Operating activities and Financing activities normally show how entity gets their cash and Investing activities shows how entity uses their money. These information shows precious insight of the entity’s financial conditions and can be found on their Statement of Cash Flow. These 3 key information of the financial statement should be analysed in the same period of time through a period of time in order to provide users with the valuable information in making the economic decisions. To provide good information, there must be accurate bookkeeping activities. Please contact us to have your accurate bookkeeping done today.