Financial reporting and accounting is a diverse branch of accounting which helps the business manage their financial transactions.

Using different guidelines these financial reports are drafted in form of an income statement or a balance sheet.

Financial reporting is a core component of every business as before the business makes any strategy changes they must consider the current financial status of the business.

A business will also need to draft financial reports for potential clients and to help ascertain the financial standing of the company.

Because these reports are used for a variety of reasons, it can be quite challenging for a business to effectively draft a financial report that reflects the current status of the business. Most businesses rely on accounting services to help them draft financial reports; one slight miscalculation can affect the validity of the entire report.

This is exactly why we at A&B Accounting have articulated three golden rules which will help any business effectively draft a financial report.

Double entry rule

This is a golden rule that every business practices in order to draft effective financial reports and statements. As the name implies, this rule basically states that every transaction has affects at least two different accounts.

For example, if a business borrows money from a financial institution, both their cash influx will increase and will their list of liabilities.

Continuous evaluation

Drafting a financial report is not an easy task and requires impeccable attention to detail. The accountant has to cross evaluate each transaction to make sure that the amount is accurate.  This golden rule requires the accountant to keep cross checking every transaction as they draft the statement. They should also evaluate the final draft before it is forwarded to the concerned department.

Format evaluation

The last golden rule that every business should consider while devising a financial report is the format being used.

Although there are numerous generic formats used for financial reports such as balance sheets, it is recommended that every business adopts a format that best suits their businesses specifications. The format the accountant chooses plays a substantial role in the complexity of the financial report; we would recommend choosing a simple format.

Finally, as mentioned before, drafting a financial report can be quite challenging and it requires a high degree of expertise and knowledge. If your business is still having trouble drafting effective financial reports, rest assured we at A&B Accounting are here to help! We provide payroll solutions, bookkeeping, accounting services, medical billing solutions and QuickBooks payroll service in Boca Raton, FL. Please feel free to call us at 954-596-9966.