The Financial Statements are classified into: General purpose Financial Statements and Special purpose Financial Statements.
FINANCIAL STATEMENTS OF GENERAL PURPOSE
These States are those that prepare themselves at the end of a period to be known by indeterminate users, with the main intention of satisfying the public good in evaluating the capacity of an economic entity to generate favorable flows of funds. They must be characterized by their condition, clarity, neutrality and easy consultation. They are general purpose statements, the Basic Financial Statements and the Consolidated Financial Statements.
Basic Financial Statements
The basic financial statements are the balance sheet, the income statement, the statement of changes in equity, the statement of changes in the financial situation (origin and application of funds) and the statement of cash flows.
- Balance Sheet: In this statement, passive assets and equity must be related, with the purpose that when recognized, the financial situation of the economic entity can be reasonably determined at a given date. Income Statement: The sum of income, costs, expenses and monetary correction, duly associated, should give us the results for the year. Statement of Changes in Equity: shows in detail the contributions of the partners and the distribution of the profits obtained in a period, in addition to the application of the retained earnings in previous periods. Statement of Changes in the financial situation: This State is used to forecast possible risk situations that the company has, but its main objective is focused on the usefulness it has for evaluating the origin and use of funds in the long term, this knowledge allows the financial manager to better plan the medium and long-term future funding requirements. Cash Flow Statement: helps in planning and generating budgets, without neglecting the measurement that can be done to meet the commitments made.
Consolidated financial statements
The consolidated financial statements are all those that present the financial situation, the results of operations, changes in equity and in the financial situation, as well as the cash flows, of a parent entity and its subordinates, or a dominant entity and the dominated, as if they were those of a single company.
SPECIAL PURPOSE FINANCIAL STATEMENTS
Special Purpose Statements are those that are prepared to meet the specific needs of certain users of accounting information. They are characterized by having limited circulation or use and by providing greater detail on some items or operations.
The following are Special Purpose States:
- The Initial Balance: At the beginning of its activities, every economic entity must prepare a General Balance that allows a clear and complete knowledge of the initial situation of its assets. The Financial Statements of Intermediate Periods: They are those Basic Financial Statements that are prepared during the course of a period to satisfy the needs of the administrators, of the authorities that exercise inspection, supervision or control. The Cost Statements: They are those that are prepared to know in detail the expenditures and charges made to produce the goods or provide services from which an economic entity has derived its income. Inventory Status: It is one that must be prepared by checking in detail the stocks of each of the items that exist in the Balance Sheet. The Extraordinary States: They are those that are prepared during the course of a period as a base to carry out certain activities. The date of the same cannot be prior to a month of the activity or the situation for which it was prepared. Settlement States: They are those that must present an economic entity that has ceased its operations, to report the degree of progress of the process of realization of its assets and cancellation of its liabilities.The Financial Statements that are presented to the authorities subject to the classification rules and with the detail determined by them. The Financial Statements prepared on a comprehensive accounting basis other than generally accepted accounting principles.
