What is a financial report? What are the components of a set of financial reports? How to prepare year-end financial reports for businesses (year-end tax settlement).
Financial statements are one of the important documents of a business, reflecting the financial situation, business performance and cash flow of the business in a certain period. Therefore, preparing accurate and timely financial statements is a mandatory requirement for every business. This is also a familiar task for every accountant, but not everyone knows how to prepare accurate financial statements and minimize risks and errors.
Therefore, Online Accounting wants to share with you the necessary basic steps, thereby helping you visualize the process of accounting bookkeeping and year-end financial reporting. Let’s find out with fdiinvietnam.com right away.
I. Regulations on financial reporting
Financial statements are a system of economic and financial information of an entity prepared according to the form prescribed in accounting standards and accounting regimes. The report provides information on the financial situation, business performance and cash flow of the enterprise.
Depending on the type and size of each business, there will be different regulations on preparing financial statements, specifically:
- Micro-enterprises: The accounting regime for micro-enterprises can be applied according to Circular 132/2018/TT-BTC or Circular 133/2016/TT-BTC;
- Small and medium enterprises (including micro enterprises): The accounting and financial reporting regime for this enterprise will be applied according to Circular 133/2016/TT-BTC;
- Large-scale enterprises: The preparation of annual financial statements must comply with the provisions of Circular 200/2014/TT-BTC.
II. What does a set of financial statements include?
➤ Balance sheet
The balance sheet shows the total assets, total liabilities, and owners’ equity of a business at a specific point in time (usually the end of the year). The balance sheet shows the balance between the assets and capital of the business, showing where the business’s investment capital is being used.
>> FREE DOWNLOAD: Balance sheet (form number B01-DN).
➤ Business performance report
Shows the financial performance of a business over a specified period of time (about 1 year). Including: revenue, gross profit, net profit from business operations, profit before tax, after tax and other related indicators such as earnings per share, dividends, etc.
➤ Cash flow statement
Shows the source of money and the cash flow of the business, how money is used in business, investment and finance activities. Helps readers understand how the business manages cash, evaluates the ability to pay, generate profits, use capital and develop the business.
>> FREE DOWNLOAD: Cash flow statement (indirect method).
➤ Financial statement notes
This is an important part of the financial statements used to explain, supplement details and provide additional information about other income and expenses. This report is intended to help ensure transparency and better understand the figures in the balance sheet, income statement and cash flow statement.
>> FREE DOWNLOAD: Financial statement explanatory note (form number B09-DNN).
III. Instructions on how to make financial reports
➤ Step 1: Collect, check and arrange accounting documents
To be able to prepare financial reports, businesses first need to collect, classify and arrange accounting documents clearly in the correct chronological order and content, and carefully check the documents to ensure the reasonableness, validity and legality of the documents.
Documents include: invoices, receipts, payment vouchers, accounting books and other related documents.
>> See now: Accounting bookkeeping service – Super savings.
➤ Step 2: Perform accounting for arising economic transactions
Based on the arranged documents, the manager proceeds to account for economic transactions arising during the annual accounting period.
This process includes checking and completing the accounting of economic transactions to ensure legality according to the provisions of the law on accounting and tax. This task can be done in parallel with step 1 above.
➤ Step 3: Classify transactions by month and quarter
Classifying transactions by month and quarter in financial statements is an important step in determining the business’s revenue, expenses and profits during the accounting period.
Additionally, you need to clearly categorize prepaid expenses, fixed asset depreciation, tool allocation, and other estimates.
For fixed assets, prepaid expenses and tools, businesses need to clearly account for, allocate time and monthly expenses reasonably, in accordance with regulations.
➤ Step 4: Check and review the summary of transactions arising in each account group.
This is a very important step in the financial reporting process. The review of the data by account group helps ensure the balance, consistency and accuracy of the financial statements. The review account groups can be classified into:
1. Inventory: Check inventory data to see if it is negative. If it is negative, find out the cause and make appropriate adjustments. Run cost price according to the registered inventory calculation method.
>> Inventory accounting method guide.
2. Accounts receivable and payable: Check and compare data with customers and suppliers, check debit and credit transactions to accurately reflect accounting operations, and calculate possible debt risks…
>> Accounts receivable and payable accounting services.
3. Investments: Review investment documents, analyze the nature, accounting methods, and balance documents to record investments to accurately reflect investment efficiency through meeting minutes and documents and financial reports provided by the investee.
4. Prepaid expenses: Check prepaid expenses in terms of value, time, objects and allocation methods to see if they reflect reality.
>> Accounting for prepaid expenses – Account 242.
5. Fixed assets: Check fixed assets for original price, usage time, depreciation objects, depreciation methods, methods for handling damaged, lost, liquidated fixed assets, etc.
>> How to account for used fixed assets.
6. Revenue: Check revenue to see if it has been reflected and recorded correctly in terms of value, time, recording method, determining revenue from contract performance, method of handling unrealized revenue, etc.
7. Cost of goods sold: Check the value data and ensure that the cost of each product or service is accurately reflected, the method of calculating the cost of goods sold, the method of handling unallocated cost of goods sold, etc.
>> How to account for cost of goods sold – Accounting for account 632.
8. Expenses: Check that the figures of the expense accounts are accurately reflected in reality and in accordance with accounting principles and the ratio of expenses to revenue.
Note:
In case of detecting errors, it is necessary to find out the cause and promptly correct the errors to ensure accuracy when declaring on financial statements.
➤ Step 5: Make summary entries and transfer revenue, expenses, profit and loss
After completing the checking and reviewing of the figures in the above steps, the accountant needs to make the profit/loss transfer entries for the year. This entry includes: accounting for the transfer of revenue, expenses, losses, profits and ensuring that accounts from type 5 to type 9 have no balance at the end of the period.
For businesses that incur corporate income tax:
- First carryover to determine interest;
- Calculate the amount of income tax payable;
- Accounting entries to record tax payments and tax expenses incurred;
- Transfer back to get final profit.
➤ Step 6: Prepare financial reports
After completing the above steps, you can proceed to prepare financial statements. This is the final step in preparing financial statements. By following the above procedures correctly, businesses can prepare standard financial statements, thereby helping financial management become more accurate, efficient and reliable.
You can create financial reports in your company’s accounting software (if available) or log in to the tax declaration support software (HTKK) to follow the following steps:
- Log in to the HTKK software with your business account;
- Select the “Financial Report” feature, then select the appropriate report set based on the accounting regime the business is applying;
- Then select “Financial year”; declaration appendix >> select “Agree”;
- Enter the declaration: Fill in all the required information in the balance sheet, business performance report and cash flow report. After filling in the information, click on the “Save” box and the message “Data saved successfully!” will appear;
- Finally, export the “XML Output” file to save the data and submit it to the tax authority. Thus, the steps to prepare the annual financial report have been completed.
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With over 17 years of experience providing financial reporting services (year-end tax settlement), Online Accounting is committed to supporting businesses in optimizing costs, time, and personnel while still complying with legal regulations.
When using fdiinvietnam.com’s services, businesses only need to provide 4 pieces of information:
- Last year’s balance sheet report (*);
- Payroll & employee ID information;
- Input and output VAT invoices in the reporting year;
- Company bank account statement for the reporting year.
(*) For newly established enterprises in the reporting year, it is not necessary to provide the balance sheet of the year before the report.
>> Refer to detailed price list: Year-end tax settlement service.
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IV. Frequently asked questions when making year-end financial reports
1. What is the deadline for submitting financial reports?
- For private enterprises and partnerships, annual financial statements must be submitted no later than 30 days from the end of the annual accounting period;
- For non-state enterprises, the deadline for submitting financial statements is 90 days from the end of the annual accounting period;
- For state-owned enterprises, the deadline for submitting quarterly and annual financial reports is separate.
2. What does a set of financial statements include?
According to regulations, the components of a business’s financial statements include:
- Balance sheet;
- Business performance report;
- Cash flow statement;
- Financial statement notes.
>> See more: Details of financial reports.