Quickly to understand about the financial statements

Hello dear...

Long time ago I used to had a problem where all the books of accounting or the financial statement that I have read is seems like a theory which contains “accounting things” in the surface only. It makes me doesn’t really understand deeply about all the things reffered to financial statements.

Getting to know about financial statement isn’t only about the forms or the component itself. But the importance is how and what is the effect of the changing of numerical transaction to the financial statement itself.

For example when we are purchasing the inventory or the stocks no matter how much it is, if there are no sales in it so what about the gross profit ? or how much is the inventory if it’s not being entry in the inventory ending balance then how do we know the result ?

So, here I am will give you a little trick to it…

We already know that the 3 crucial components in financial statement are the report of:

1.       Capital Statement,

2.       Profit and Loss,

3.       Balance Sheet

They are affecting each other as I say, so if there any changing from one of account there must be affecting the other account.

From what we’ve learned about the accounting cycle or other sources, just take it on to Microsoft excel first (it’s a tool we use to help). Then make 3 forms that will describe the form of those reports (profit and loss, capital statement, and balance sheet), make the account as simple as possible, and then make an excel formula that will connect to each other. Once again I just make the account be as simple as it is easy for you to understand the basic about the flow of financial statement. I suggest that you just ignore for a moment about all theories you got from other people and book in your head, so it won’t distract your concentration. Please don’t take it too far (no heart feeling)  because I know that some of you guys probably already know what accounting is, but here my explanation is more referred to some of us who are not that deeply understanding about all accounting and such things.

So I give you more example below, I beg your pardon because I’m not giving you the template of the example that I told you before, but I do hope that this excel practice will improve your skills in accounting things and hopefully also give you more value in the job that we are doing right now.

So sorry and I hope you will be understand, because this example in excel was in Indonesia Version and not in English Version. 

You see that on the right corner below, “balance” show us Zero number. Its mean that Balance Sheet is in Balance Condition, and there’s no different between Company Assets and Company Liabilities.  

Ok guys, good luck for trying the accounting in excel, I hope in 2 days we have improving more of our knowledge and also the flow of the accounting cycle itself to make a good financial statement.

Thank you so much and see you soon…..

 
Walaikumsalam Wr.Wb


Blank transaction 





After transaction booked