Know the Characteristics of Financial Statements Before You Make It


Know the Characteristics of Financial Statements Before You Make It

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Financial statements are one form of corporate responsibility to its stakeholders. Financial statements are records of financial information of an entity that can describe the performance of the entity in an accounting period. Financial statements are prepared to present information about the company’s performance and are useful for making business decisions. In addition, the financial statements also show a form of transparency and accountability of the company/entity/organization to the public.

The company’s financial statements are made at the end of each accounting period. Each company has a different accounting period. It can be for 1 year, or per 6 months depending on the policies of each company. Financial statements help assess company performance during an accounting period. In addition, financial statements also help companies to determine the company’s next steps.

In general, there must be four financial statements made by companies, both manufacturing companies and other types of companies, namely the income statement, changes in capital, balance sheet, and cash flow statement. However, financial statements that are made are not just made just like that. There are characteristics that must be met in the financial statements. The basic characteristics that must be met in a financial statement are as follows.


Relevant means that the financial statements in it must contain information that can influence users’ decisions by helping them evaluate past or present events and can predict the future.

Relevant financial statements are financial statements that record every company’s transactions during one accounting period.


So that the information in the resulting financial statements can be trusted and reliable, then the presentation of information in the financial statements must be made based on applicable regulations or guidelines. In addition, financial statements are also presented thoroughly. As we know, the information in financial statements must be free from misleading notions and material errors, present information honestly and can be verified. So the relevant information is not enough because it is not reliable. If so, the information contained in financial statements can be misleading and detrimental to users of financial statements.

Can be compared

You need to know that the financial statements made must also be compared with other companies. This will be useful for assessing your company. To be compared with other companies, the accounting system, guidelines and policies used must be the same. Besides comparing with other companies, financial reports can also be compared between years. To compare between years, the presentation of the company’s financial statements must be presented in at least two periods.


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