Mistakes in Making Financial Statements

Financial reports are one of the most important things in business. Without a financial report, you will not know the extent to which the business is developing. With the existence of financial reports, 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 for the resulting financial statements to be accurate. Do not let you enter the wrong data in financial reports which can have fatal consequences for the company. To keep mistakes from being repeated, you need to use Sydney bookkeepers. Inventories in trading companies are an important asset. Of course, the company will do physical calculations to match the inventory reports that have been previously made. It could be due to the wrong calculation, making the inventory at the end of the period too high or too low. This will later have an impact on the balance sheet in the financial statements.

Record errors can occur so that the nominal for the account used is not suitable. For example, when a cash sale is made, you mistakenly record it as a credit sale. This has an impact on increased debt and excess cash when cash taking is carried out. In determining the cost of goods sold, the 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 which is displayed is no longer accurate.

The accounting records for cash receipts and payments are divided into two methods, namely accrual and cash basis. There are differences when recording cash using these two methods. For example, for the cash basis method, costs are recorded when the money is issued, while the accrual basis is recorded when the costs are used. Trading companies often find sales on credit. In credit sales, it is necessary to take into account the age of the accounts receivable. Don’t get busy selling on credit but forget to collect receivables. The company might lack cash for operating costs if you don’t collect receivables. Maybe your financial statements are wrong because you forgot to take into account the transportation costs. These transportation costs can arise when buying goods or selling goods to consumers. There are freight costs borne by the buyer, but some are borne by the seller. For that, before buying, make sure the terms of the transportation costs are not wrong in calculating the cost of goods sold.

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