Whenever we talk about the financial statement preparation, our mind starts thinking about the tax. It is filing of tax returns. However, this perception is not correct. A financial statement is beneficial beyond the common understanding that we have about a matter of fact that most people think it is a kind of statement that has nothing to do with anything else than it. However, it is not true, as it is one of the most useful analytical instruments. In fact, a properly managed and supervised financial statement preparation process can end up in very useful documents to pilot your business activities.

1. Understanding accounting can be done through financial statement preparation. However,
there are certain steps that can help you understand accounting via financial statement readiness.
Provided these steps are well executed, you will be able to have clear knowledge on how financial
statement preparation can be practiced in accounting. Read on to discover the working strategies of how
financial statement readiness works with accounting. The balance sheet can always be prepared by using
the final financial statement. It can as well take notice of the income record also. When talking about
GAAP, you will have to accentuate on two other financial records. This can be found in the likes of the
statement of owner’s equity and the statement of cash flow. Financial statement preparation is the sole
basis for understanding the accounting of a company.
Financial Statement Preparation Unleashes the Fundamental Accounting Equation And
The Balance Sheet:
The fundamental accounting equation reveals the value of the balance sheet. It simply means that the
liabilities and equity are equal to assets. At the end of the accounting time, you will be able to find the
balances of a company. This can always be possible through financial statement readiness. A classified
structure is required in the entire process. This will help to classify the liabilities and assets. This can as
well be in the form of non-current or current statements. When a conversion is done within one year, an
asset is a classified current. In most cases, it involves accounts inventory and receivable. When an asset is
not current, it can be called non-current. You can in the order of liquidity classify current assets. The term
is simply referred to an asset that can be converted to cash. The cause of disagreement here is that
without financial statement preparation and the readiness of these statements, none of the above can be
possible.

2. Financial Statement Preparation & the Revenue Record
The expenses and revenue account balances can be found in the income record at the end of an
accounting year. This is the record that unveils the expenses and income within a given period. Profit or
Net income will be experienced when an establishment discovered that revenue surpasses expenses. In a
case where the expenses are above the revenue, it means that an establishment will experience a loss. The
nature of the business will always reflect the structure of the income statement. For a simple business
income record, you will find two sections available in the division process. It is usually divided into the
expenses and income sections. This can as well be possible through the idea of financial statement
readiness. Financial Statements are also good to minimize the risk of fraud and malpractices from your
business.
Financial Statement Preparation Helps in Tracking Success
To reflect the economic functionality of a business, accrual accounting is performed. This will help to
unleash a better picture of how successful a business is operating over a given period. In certain
instances, you will discover that accrued liabilities and assets are converted to cash. It becomes a limited
value when an asset cannot be converted to cash. It is often a long-term process for a customer to convert
assets into cash. This is basically because of the benefits of cash flow. Now, after understanding this
concept, it is important to know that financial statement readiness will help in the entire process. For this
reason, it should be embraced with total readiness for accounting. The truth is that financial statement
readiness is the source of success for any business that wants to grow. Applying this strategy will always

3. help you to remain effective in business. You will not have to be afraid of making inventory for your
company, time and again. Financial statement preparation is the backbone to accounting and business
management.
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Source: https://www.glgaccounting.com/financial-statements/