The financial statement analysis ratios enable us to validate a company’s performance. These are simply ratios based on data from financial statements that assess if a company is a profitable, can pay off its debts and is utilizing money wisely. Schools can help students realize the potential by choosing finance as a career that can significantly maximize a business with improving financial performance. Businesses prepare financial statements that convey information about their profit, assets, cash flow, and liabilities. These reports are structured using a certain format of financial statement, which keeps the data organized. The balance sheet format, income statement format, cash flow statement format, and others are all part of the financial statement format. A typical financial statement format will present information on assets, income, expenses, and changes in equity.
What is the Standard Financial Statements Format?
The financial situation of a Business is represented in standard financial statement format. There are four primary statements: the balance sheet, the income statement, the cash flow statement, and the statement of changes in equity. These are designed to follow a standard format so investors and stake holders can easily compare the reports of different companies.
Balance Sheet Format
A balance sheet format lists what a business owns and owes. It tells us the money the company has and how much it owes others. This has two sides, namely Assets, and Liabilities + Owner’s Equity. The totals from either side should always equal. A basic balance sheet structure is as follows:
| Assets | Amount (₹) | Liabilities & Equity | Amount (₹) |
| Cash | 20,000 | Loans Payable | 10,000 |
| Accounts Receivable | 15,000 | Owner’s Equity | 25,000 |
| Inventory | 10,000 | ||
| Total Assets | 45,000 | Total Liabilities + Equity | 45,000 |
This template gives users an idea of whether or not the business has enough assets to pay off its debt.
Income Statement Format
The income statement shows how much the company made and spent in a period. It displays revenue at the top, expenses in the middle and bottom-line profit at the bottom. This is known as the profit and loss statement format as well. Here’s a simple income statement template:
| Particulars | Amount (₹) |
| Revenue | 1,00,000 |
| Cost of Goods Sold | 40,000 |
| Gross Profit | 60,000 |
| Operating Expenses | 20,000 |
| Net Profit | 40,000 |
This format is helpful for checking whether the business is making money or losing money.
Cash Flow Statement Format
This cash flow statement format follows the inflow and outflow of cash in the company. It has three parts:
- Operating Activities – cash from primary business work
- Investing Activities — cash from purchasing or selling assets
- Financing Activities– cash from loans/funds/ equity
This shows whether the company has enough cash to operate its business each day.
Financial Statement Format for Companies
Financial statements for big companies are made according to special rules. These rules keep things tidy, accurate, and easy to comprehend. Such company financial statements format should be as per the accounting standards i. These standards tell you how to structure every section of a financial report
Format of Annual Financial Statement
EThe financial statement prepares in the format of annual basis at every end of the year. It covers all four primary financial statements as well as disclosures and supplementary reports. These opposite statements provide a comprehensive view of the company’s financial condition. Companies in India are governed by the Companies Act, 2013. They must report on a calendar year basis the following:
- Balance Sheet
- Profit and Loss Account
- Cash Flow Statement
- Statement of Changes in Equity
- Notes to Accounts
These reports are only one part of the financial reporting format that are required to follow a predetermined structure. This makes it easier for investors, lenders as well as auditors to interpret the financial position.
Data Obtained by Companies
The format in which it is most commonly found is vertical. It just lists everything in order from top to bottom in a list like fashion. Here is a business financial statement format Sample Format Structure
- Your Balance Sheet – shows assets & liabilities on the last day of the year
- Profit and Loss – that shows total income and expense for the year
- Cash Flow Statement — shows all the cash received and spent during the year
- Statement of Changes in Equity – shows changes in owner’s capital
- Notes to Accounts – to provide additional explanation about the numbers filed
Independently they sign and approve the format of accounting statement used by the organization in the meetings of the board.
The Value of Format For Companies
This format makes it easier to read the data. Investors can simply skim the figures and then do business. It makes comparison of performances simpler if all companies are following the same rules.
- Saves Time– Another reason why organizations utilize a financial statement template is that it saves time. These templates conform to accounting requirements, allowing for the recording of data. They remove errors and keep records accurate.
How to Create a Financial Statement Format?
The financial statement will take all financial data of a business. The Guide: I will say the process does take time though it is by no means complicated as long as you follow a step-by-step approach. Walk through those steps and they come together into the final report that tells the world what’s happening with a company’s finances. Let’s unwrap this in small measures. This counts for businesses of all sizes from small to corporations.
Step 1: Gather All Financial Data
Getting all records (Sales invoices, Purchase Bills, Generate Salary sheets, Rent slips, Bank statements, etc. All reports rest on this heavy lifting, which these papers do.
Step 02 : Prepare the Trial Balance
AUX Profiler Standard Reporting (APSR) – get all account balances from the records. This will include:
- Cash
- Inventory
- Revenue
- Expenses
- Assets
- Liabilities
The debit in this column is all the lines calculating a positive balance. For example, if this were a row in a ledger, you would add all lines in its debit column and add all rows in its credit column. This trial balance is used to prepare the statement.
Step 03: Write your profit and loss statement
Plan income statement line from the preliminary equilibrium information pursued by preparing a shutting passage. That includes what you earned and all the expenses you incurred.
- Non-interest income, interest income, net revenue
- Sales revenue is equal to the cost of goods sold and other expenses
- We will also calculate the net profit/loss
- And it’s a helpful format for measuring how good or bad business owners were.
Step 4 – Now, set up your Balance Sheet
For simplicity, let us take the end balances of assets and liabilities. Show them plainly — in balance sheet form.
Assets = Liabilities + Equity
Both sides should match. Otherwise, do the math again.
Step 5: Complete the Cash Flow Statement
Now it will show all your cash transaction. Break them into:
- Cash flows from Operations: cash received from customers, cash paid to suppliers
- buy/sell machines (investing)
- Financing: Loand or cash purchase
- It says whether a company has enough liquid cash in hand.
Step 6: Statement Of Changes in Equity
Statement Of Changes in Equity means the variations of capital like:
- New capital added
- Withdrawals
- Profit retained
It gives the capital at the end of owner aur Shiv or shareholders.
Step 7: Add Notes and Disclosures
This step is important. Given a couple of comments clarifying figures used, will include all below: Mention reference items — tax changes, depreciation method, pending matters, etc. The full format reflects that true financial state of the company. Financial Statement Template — You can purchase a template/ worksheet as well to get a jump start on things.
Relevance to ACCA Syllabus
This essentially includes the knowledge of assets adjustments and provisions as per local accounting reporting standards for preparing financial statements which comes around one of the premier topics provided by the ACCA with respect to finance, insurance and many other sectors. A fairly straightforward concept, the core of the financial statements underpin many topics across SBRA and FRA related to corporate reporting, consolidation & financial analysis.
Financial Statement Format ACCA Questions
Q1: What is the summary statement of company revenue and expenses for a certain period of time?
A) Balance Sheet
B) Income Statement
C) Statement of Cash Flows
Changes in Equity Statement
Ans: B) Income Statement
Q2 Which among the following is current liability?
A) Land and buildings
B) Trade payables
C) Retained earnings
D) Non-current borrowings
Ans: B) Trade payables
Q3: What does IAS 1 requires in presentation of financial statements?
A) Cash-based format
B) Horizontal format
C) Accrual-based format
D) Cash T-account format
Ans: C) Accrual-based format
Q3: Statement of Financial Position (Balance Sheet) Primarily shows:
A) Equity
B) Current liabilities
C) Non-current liabilities
D) Assets
Ans: D) Assets
Q5: What does the word ‘Equity’ need for any financial statements to be released?
A) Cash equivalents
B) Accrued income
C) Share capital
D) Depreciation
Ans: C) Share capital
Relevance to US CMA Syllabus
US CMA exam is a finance-based exam that focuses on the area involved in financial planning, performance and analytics. The basic format for financial statements (namely, an income statement, balance sheet, and cash flow statement) comprises one of the major areas being tested on Part 1 of the exam. Well you are a financial information candidate learned on this, you also learn to make economic decisions.
Financial Statement Format CMA Questions
Q1: Which part of the balance sheet organises the assets in a order of cash accessibility?
A) Equity
B) Liabilities
C) Non-current assets first
D) Current assets first
Ans: D) Current assets first
Q2: What are items on multi-step income statement which would not appear in single-step?
A) Net income
B) Operating income
C) Total revenue
D) Depreciation
Ans: B) Operating income
Q3:What form of presentation makes Management Accounting capable of investigating costs?
A) Functional format
B) Cash flow format
C) Natural format
D) Vertical format
Ans: A) Functional format
Q4: What is the analysis of statement showing how a company made and spent money?
A) Positions in the Funds
B) Statement of Cash Flows
C) Income Statement
D) Statement of Equity
Ans: B) Cash flow bottom lines
Q5: The formatted Income Statement is also known as the Profit and Loss (P&L) Statement. What does it ultimately show?
A) Operating profit
B) Net sales
C) Net income
D) Gross margin
Ans: C) Net income
Relevance to US CPA Syllabus
US GAAP ( FASB) US CPA exam aspirant need to be very strong on US GAAP and his know how the financial statement ( balance sheet, income statements, statements of cash flows etc) are prepared, So in-depth knowledge behind all the standards, classification, Line item & presentation standards for individual and consolidated financials are the requirement.
Financial Statement Format CPA Questions
Q1: The Statement of Cash Flows under US GAAP will be prepared by the __ method.
A) Accrual basis
B) Direct or indirect method
C) FIFO only
D) LIFO method
Ans: B) Direct or indirect to method
Q2: Discontinued Operations – What line on the income statement do you place it directly?
A) Operating income
B) Other comprehensive income
C) Net income
D) Income from operations
Ans: D)After operating income section
Q3: What statement would a CPA use to determine the solvency of a company?
A) Income Statement
B) Balance Sheet
C) Income Statement
D) Statement of retained earnings
Ans: B) Balance Sheet
Q4: how about net income and dividends? Where does that know under equity?
A) Common stock
B) Retained earnings
C) Paid-in capital
D) Treasury stock
Ans: B) Retained earnings
Q5: What is a classified balance sheet commonly used for?
A) In order of size
B) Randomly
C) Current and non-current
D) By account number
Ans: (c) Current and non-current
Relevance to CFA Syllabus
Cross-Cutting Analysis in Financial Statement Analysis in the CFA Reading You will also need to know how financial statements are prepared and presented under US GAAP and IFRS. Its use is for investment decision making by comparing income statements, balance sheets and cash flows.
Financial Statement Format CFA Questions
Q1: Under IFRS, what is the order of sections of cash flow statement?
A) Investing, Operating, Financing
B) OIF
(C) Financing, Operating, Investing
D)Time, Money, Investment
Ans: B) Operation, Investment, Finance
Q2: Where to show interest paid and interest received in cash flow statement under IFRS?
A) Operating only
B) Financing and Investing
C) Operating Or financing/ Investing
D) Only Investing
Ans: C) Operating or Financing/Investing
Q3: What do you see in the table you referenced in the “Other Comprehensive Income” section above?
A) Earnings before tax
B) Other comprehensive income (loss)
C) Total cash inflow
D) Sales revenue
Ans: B) Net income w/o G/L
Q4. What is comparative formatting of financial statements?
A) To reduce audit fees
B) To comply with tax rules
C) Enable comparable firms
D) To hide financial errors
Ans: C) To compare the firms between them
Q5: Which of financial statements reflect a firm’s liquidity and the ability of a firm to meet its short—term obligations?
A) Income statement
B) a combined statement of modifications in equity
C) Balance sheet
D) Cash flow from investing
Ans: C) Balance sheet
