There Are Some Common Mistakes In The Making Of Financial Statements
Financial statements are one of the most important things in business. Without financial statements, you will not know the extent of business development that is being undertaken. With the existence of financial statements, you can make the right business strategy to support the company’s development. However, sometimes errors occur in the preparation of financial statements. These mistakes must be avoided so that the resulting financial statements become accurate. Do not let you enter the wrong data in the financial statements that have fatal consequences for the company. Additionally, if you want to avoid making mistakes in your bookkeeping activities, we suggest you hire a professional from Richard Darcy Gold Coast Bookkeepers.
The following are some of the common mistakes made when preparing financial statements for trading companies:
Mistakes in Calculating Inventory
Inventory in trading companies is an important asset. Of course, the company will do physical calculations to adjust to the inventory reports that have been made previously. It could be because it miscalculated making inventory at the end of the period either too high or too low. This will later have an impact on the balance sheet in the financial statements.
Recording errors can occur so that the nominal for the account used is not appropriate. For example, when you sell cash you mistakenly recorded it as a credit sale. This has an impact on increasing debt and excess cash when cash hospitalization is conducted.
Not Calculating the Cost of Goods Sold Thoroughly
In determining the cost of goods sold in a company must pay attention to three things, namely inventory, net purchases, and returns. Maybe you forgot to enter the cost of transportation and returns to calculate the cost of goods sold. Finally, the cost of goods sold displayed is no longer accurate.
Cannot Distinguish Accrual and Cash-Based Accounting
Accounting records for cash receipts and disbursements are divided into two methods, namely accruals and cash basis. There is a difference when recording cash using these two methods. for example, for the cash basis, the cost is recorded when issuing money while the accrual basis is recorded when the cost is used.