Small Business Financial

Statement Preparation

Jacobsen & Wachterhauser, PLC is dedicated to providing corporations and small business owners with accurate financial statement preparation and analysis services.

We prepare all forms of financial statements for Arizona businesses, including all standard documents, such as income statements, cash flow statements, balance sheets, and statements of retained earnings.

Financial statement preparation is conducted by a CPA and we guarantee the highest quality of work to ensure an accurate and precise representation of your financial position.

We are always available to assist you. Our offices are conveniently located in the Camelback area, to schedule a consultation, click here to contact us.

Income Statements
A company’s income statement, P&L or earnings statement, is mainly designed to show net income after a given length of time, usually one year. When preparing an income statement, revenues are detailed first then expenses are listed. After inputting revenues and deducting expenses, net income is determined. Expenses include taxes and various costs such as for production, materials, and advertising.

Retained Earnings Statement
The beginning retained earnings amount is shown on the first line of the statement. Then, net income and dividends are identified. The retained earnings ending balance is the final amount on the statement. The information provided in this statement indicates the reasons why retained earnings increased or decreased during the period. If there is a net loss, it is deducted with dividends in the retained earnings statement.

Balance Sheets
The term ‘balance’ is used to express the necessity for assets to equal total liabilities plus stockholders’ equity. A company’s assets may include: land, buildings and structures, equipment, cash, and accounts receivable. Balance sheet liabilities include tax obligations, and monies owed to suppliers and/or lending institutes.

Why has the statement of cash flows become so important for managers and investors?
The statement of cash flows has become important for manager, investors, and accountants because it contains information that is mainly valuable for determining the financial well-being of the firm. By disclosing all operating activities, investing activities, and other financial activities in one statement, users of the data can quickly assess the current condition of the firm and how long-term investments and liabilities may affect the firm in the future.

Managers in particular can use the statement of cash flows to quickly determine how much revenue is earned from operations in comparison to other means of revenue and after operating expenses. Similarly, investors can see how much money a firm earns in comparison to how much it owes; allowing the investor(s) to make a more educated decision about the security of their investment.

Another benefit to managers, investors, accountants, and other users, is that the statement of cash flows derives its information from comparative balance sheets, which show changes in assets, liabilities, and equities during the period; current income statement, which helps to determine the cash provided during the period; and select transaction data, which is from the general ledger and details additional cash provided or used during the period.

Publically traded firms are required, by the Securities and Exchange Commission (SEC), to disclose their statement of cash flows reports to both the SEC and the public. Most public companies use accrual accounting, which can be helpful for analyzing the cash flow statement.

The reason for this is that a firm could land a major contract; allowing the contract to be recognized as revenue during the period, even though cash has not yet been received. Although the company has not received the cash, the user of the cash flow statement can see that the company will earn the money, making the firm’s cash flows more attractive.

As we can see, the statement of cash flows has several very beneficial uses, which, as mentioned, provides relevant information regarding cash inflows and outflows. By fully grasping the increase and decrease of a firm’s cash, users of the report – investors, lenders, and miscellaneous stakeholders – can make an informed assessment of how well the firm manages its cash flows and where the main sources of cash are earned and used.

Additional Financial Accounting Information:

• Debt Securities and Equity Securities
  Distinguish between a debt security and an equity security: A debt security can be classified as held-to-maturity; however an equity security has no maturity date. Furthermore, a debt security can easily by either bought or sold between two parties. Examples of debt securities include: municipal bonds, CDs, CDOs, and corporate bonds. What are the main [...] […]
• State of Arizona Government-Wide Statements and Reporting Entities
  Either using a previous selected government entity CAFR or another government entity, identify where the government-wide statements have been presented using the fund statements: In the State of Arizona’s 2008 CAFR, government-wide statements are presented in the Independent Auditor’s Report. State of Arizona Government-wide Statements include governmental a […]
• Financial Statements and Reports Required by the AARP
  Either using a previous selected NFP CAFR or another NFP CAFR you are interested in; identify what financial statements are required of that organization? The not-for-profit financial reports for the AARP – a nonprofit, nonpartisan membership organization that helps people 50 and over improve the quality of their lives. How are they different or comparable [ […]
• Not-for-Profit Contributions and the AARP
  Many of us make pledges such as to NPR, or other organizations (religious groups, social organizations, etc…) When a not-for-profit (NFP) receives these they must account for them. Sometimes though, they may have a “gift” for making a donation. And this may have different consequences. Think of an NFP that you know of. How do [...] […]
• Fiduciary Funds and Permanent Funds
  What is the distinction, as drawn by the GASB, between a fiduciary fund and a permanent fund? Permanent funds are government funds that are accounted for on the modified accrual basis. These funds are reported the same as other governmental funds, though each permanent fund is displayed in a separate column. Fiduciary funds can be [...] […]
• The Main Components of A Comprehensive Annual Financial Report
  What is CAFR and what are its main components? CAFR is a comprehensive annual financial report for government agencies. It includes the organization’s year-end financial statements. Main components of a CAFR typically include an introductory section, which includes a letter of transmittal, an organizational overview, and details about organizational official […]
• Audit Engangement Planning
  What is the purpose of engagement planning? The purpose of engagement planning is to ensure that both the auditor possesses the knowhow and capabilities needed to address the client’s needs, and that the client is of integrity and has not imposed any restrictions that may cause the auditor to issue an unqualified opinion. What critical [...] […]
• Auditing and Public Accounting as a Guarantor of Results
  Why is public accounting often viewed as a guarantor of results, or even as a provider of assurance that one’s investment is of high quality? Often public accounting is viewed as a guarantor of results, or even as a provider of assurance that one’s investment is of high quality for several reason. First, public accounting [...] […]
• Sarbanes-Oxley Act and Auditing
  What is the Sarbanes-Oxley Act? The Sarbanes-Oxley Act of 2002, also referred to as SOX, was enacted in reaction with the public’s outcry to more closely regulate corporate and auditor accountability. After the numerous corporate scandals that wound up costing shareholders their entire life savings, it was clear that new legislation was needed in order [...] […]
• International Accounting, US GAAP and Financial Reporting
  How does GAAP affect financial reporting? GAAP affects financial reporting in numerous ways. GAAP sets the guidelines, principles, laws, and framework for accounting professionals to follow when conducting accounting work and when reporting financial information. The Securities and Exchange Commission (SEC) requires that publically traded companies prepare t […]