Financial statements are an important document for assessing the financial health of a business. It provides investors, banks, and other stakeholders with information about a company's income, expenses, profits, and liabilities.
What is a financial statement?
A financial statement is a document that contains information about the assets, liabilities, profits, and other financial aspects of a business for a certain period of time. According to Article 3, Clause 1 of the 2015 Accounting Law, “Financial report is a system of economic and financial information of an accounting unit presented in the form prescribed in accounting standards and accounting regime. Financial statements are applicable to all types of enterprises in accordance with the laws of Vietnam. Enterprises are obliged to prepare and submit financial statements on time, accurately, and in accordance with the accounting and statistical regimes.”
Financial statements must provide information of an enterprise about the following information:
Asset;
Liabilities must pay;
Equity
Revenue, other income, production, and business expenses, and other expenses;
Profit, loss, and distribution of business results;
Cash flow.
In addition to this information, an enterprise must provide other information in the "Notes to the Financial Statements" to further explain the items reflected in the financial statements and the accounting policies used to record the financial statements. receive transactions.
If the company operates under Circular 200/2014/TT-BTC, the required reports include:
Balance sheet Form B01
Business performance report Form B02 – DN
Cash Flow Statement Form B03 – DN
Notes to financial statements Form B09 – DN
In case the company operates under Decision 48/QD-BTC, the required reporting documents include:
Balance sheet Form B01 – DNN
Business performance report Form B02 – DNN
Notes to financial statements Form B09 – DNN
Account balance sheet Form F01- DNN.
If the company operates under Decision 15/2006/QD-BTC, the required reports include:
Business performance report Form B02 - DN
Cash Flow Statement Form B03 - DN
Notes to financial statements Form B09 - DN
Balance sheet Form B01
Business performance report Form B02 – DN
Cash Flow Statement Form B03 – DN
Notes to financial statements Form B09 – DN
In case the company operates under Decision 48/QD-BTC, the required reporting documents include:
Balance sheet Form B01 – DNN
Business performance report Form B02 – DNN
Notes to financial statements Form B09 – DNN
Account balance sheet Form F01- DNN.
If the company operates under Decision 15/2006/QD-BTC, the required reports include:
Business performance report Form B02 - DN
Cash Flow Statement Form B03 - DN
Notes to financial statements Form B09 - DN
Purpose of financial statements
Financial statements are an important document that companies need to ensure accuracy and transparency, it is important for companies to prepare financial statements according to accounting standards and regimes. This not only helps maintain the integrity of the financial statements but also allows stakeholders to make informed decisions about the company.
Financial statements are an important document that businesses need to process and submit to state management agencies to ensure the provisions of the Law on Accounting and Statistics. According to Article 97 of Circular 200/2014/TT-BTC guiding the corporate accounting regime, financial statements have the following functions:
Financial statements are used to provide information about the financial position, business situation and cash flows of an enterprise, to meet the management requirements of business owners, State agencies, and the user needs of enterprises. users in making economic decisions. Financial statements must provide information about an enterprise:
a) Property;
b) Liabilities;
c) Equity;
d) Revenue, other income, production and business expenses and other expenses;
e) Profit, loss, and distribution of business results;
f) Cash flows.
In addition to this information, the enterprise must also provide other information in the "Notes to the Financial Statements" to further explain the items reflected in the consolidated financial statements and the accounting policies. used to recognize economic transactions, prepare and present financial statements.
When do I need to submit financial statements?
The deadline for submitting financial statements of different types of companies is as follows
For state-owned enterprises
- The accounting unit must submit the annual financial statement within 30 days from the end of the annual accounting period; Specifically, for the annual accounting period from January 1 to December 31, the enterprise must submit financial statements before January 30 of the following year.
For parent companies, state corporations: the deadline for submitting annual financial statements is 90 days from the end of the fiscal year. Specifically, for the annual accounting period from January 1 to December 31, the enterprise must submit financial statements before March 30 of the following year.
For other businesses:
- Private enterprises, partnerships: the deadline for submission of annual financial statements is 30 days from the end of the fiscal year. Specifically, for the annual accounting period from January 1 to December 31, the enterprise must submit financial statements before January 30 of the following year.
- Other enterprises: the deadline for submitting annual financial statements is 90 days from the end of the fiscal year. Specifically, for the annual accounting period from January 1 to December 31, enterprises must submit financial statements before March 30 of the following year.
What types of financial statements are there?
There are four basic types of financial statements that businesses need to pay attention to, namely: Business Reports; Statements of cash flows; Reports on changes in equity; Accounting balance sheets.
What does a financial statement include?
As a rule, a complete financial statement includes the following contents:
- Tax finalization declarations:
+ CIT finalization declaration.
+ PIT finalization declaration
- Set of financial statements:
+ Balance sheet
+ Report on business performance
+ Cash flow statement
+ Account balance sheet
- There are also attached appendices:
+ Notes to financial statements
Status of performance of obligations to the State
- Contents of financial statements: In the financial statements, it is necessary to provide specific information about:
+ Assets
+ Liabilities and equity
+ Revenue, other income, business expenses
+ Profit, loss and distribution of business results
+ Taxes and other payables to the State
+ Other assets related to the entity
+ How cash flows in and out on the cash flow statement.
In addition, in the notes to the financial statements, the enterprise must also provide additional information on applied accounting regime, accounting form, recognition principles, pricing method, inventory accounting, method of depreciating fixed assets…
The form and content of a presentation and the time limit for preparation and submission of the consolidated financial statements are made in accordance with the provisions of Vietnamese law.
As follows:
For the parent company and the group, when both the consolidated financial statements are prepared and the consolidated financial statements are prepared, the first consolidated financial statements must be prepared.
The order of synthesis by type of activity is as follows: Production and business, investment in capital construction or the enterprise's business and production career.
Finally, prepare consolidated financial statements or consolidated financial statements between types of activities.
While preparing financial statements between production and business units, regulations on consolidation of financial statements were implemented.
Meaning of reading financial statements and how to read financial statements
Meaning of reading financial statements
Financial statements act as a statistical tool and reflect the entire financial performance of a business, in relation to its budget. Thus, financial statements are not only important to the business but also the basis for government agencies and partners. Here are some specific examples:
For business owners: Reading financial statements helps business owners understand the financial position of the company, and identify strengths and weaknesses in the financial situation, thereby offering remedial and management measures. corporate finance more effectively.
For banks: Banks read financial statements to understand the "health" financial position of the business, and grasp the capital structure, revenue, and profit ratio, thereby using it as a basis for lending decisions.
For investors: Investors use financial statements to learn about the business, and determine the rate of return and level of risk, thereby making appropriate investment decisions.
For authorities: Reading financial statements helps authorities detect potential risks, prevent mistakes, and put in place better management measures to ensure growth and enterprise safety.
How to read financial statements
When reading financial statements, there are three important types of reports that we need to pay attention to: the balance sheet, the income statement, and the cash flow statement.
On the balance sheet, there are two important accounts to note: account 131 (receivables from customers) and Account 331 (accounts payable to suppliers). ). We need to see if these two accounts match. The important thing to remember is:
If accounts 131 and 331 are down year-on-year, that's a good sign.
Account 131 should not account for too large a proportion of the enterprise's assets.
Account 331 should not account for too large a proportion of the enterprise's equity.
How to read the income statement
When reading the income statement, we need to do the following steps:
Separation of business revenue and expenses.
See the share of each revenue item in total revenue and the share of each expense in total costs. Compare the change in revenue and expenses over the same period last year.
Observe, analyze, and evaluate changes in business revenue and expenses.
How to read the cash flow statement
By reading the cash flow statement, we can understand the turnover of capital and the ability to recover capital quickly and slowly. Points to note include:
Cash Flow from Operations: Includes payments from customers, payments to suppliers, payments to employees, paying taxes, paying bank interest, etc. This is the amount of money generated by the business and is not borrowed or raised.
Cash flow from investing activities: This is the cash flow related to the acquisition, resale or disposal of fixed assets or long-term assets of the business.
Cash flow from financing activities: This is the cash flow related to the increase or decrease of equity and debt activities of the business.
When reading the cash flow statement, keep the following points in mind:
Except when talking about cash flows from operating activities, cash flows from investing and financing activities usually have an "increase" in the current period and a "decrease" in the future period, or vice versa.
The most important thing is to focus on cash flow from operations, because it reflects the business's ability to generate cash in reality.
The amount of cash and cash equivalents at the end of the period may "decrease" from the previous period, but this is not necessarily a bad sign, as it may be because the business has paid off previous loans
Với việc hiểu và đọc báo cáo tài chính một cách đúng đắn, chúng ta có thể đánh giá được tình hình tài chính của một doanh nghiệp, nhận biết các điểm mạnh và yếu, đồng thời đưa ra các quyết định quan trọng về đầu tư, vay nợ và quản lý tài chính.
Financial statement form (Issued with Appendix 02 - according to Circular No. 200/2014/TT-BTC dated December 22, 2014 of the Ministry of Finance)
What are notes to financial statements?
Notes to the financial statements are a part of explaining and supplementing information about production and business activities, financial position, and business results of the enterprise in the reporting period. It provides more detailed and clear information than other reports. Through the explanation, investors can understand more clearly and accurately the actual operation of the business.
The notes to the financial statements include the following basic contents:
Business characteristics: An overview of the business's operations, including the business, products or services offered, and other important characteristics.
Accounting period and currency used: Specify the time and currency used to prepare the financial statements.
Accounting Standards and Applicable Regime: Refers to the accounting rules and regulations that apply to the preparation of financial statements, including international accounting standards and internal regulations of enterprises.
Applicable accounting policies: Describes the accounting decisions and methods used by an enterprise in the recognition and processing of financial information.
Additional Information for Statements: Provides more detailed information about the items presented in the balance sheet, income statement, and cash flow statement.
The notes to the financial statements help to better understand a company's financial information and provide a reliable basis for investment decisions and financial management.
Based on the information shared above, RSM Hanoi aims to have provided you and other interested parties with comprehensive insights into financial statements. We appreciate your ongoing interest in our content and publications, and we look forward to your continued engagement and support.