Importance of Statement of Comprehensive Income
Statement of Comprehensive Income, also referred to as profit and loss statement ( Also see Profit and Loss Account ) is one of a deliverable you could receive from an accounting service in Johor Bahru. It offers you a summary of your company’s profitability and the direction the company is heading.
Business owners ( Also see Characteristics of Successful Business Owners) would wish to know where their money goes. A Statement of Comprehensive Income is an efficient method of identifying how and where you use the money.
This statement assists a company in evaluating development by summarizing records of profits and losses over a duration, which will provide information to the stakeholders, owners and the management. This could either be prepared monthly, annually or quarterly.
Such records are essential because these are useful in identifying areas or items that the business invests the majority of its resources. It is much easier for the business to work on methods and ponder on alternatives to reduce or minimize the expenditures. For instance, if a company spends most on phone calls, a plan can be made with the service providers to obtain the best deals.
This statement enhances the transparency of business where the stakeholders and the public could access to the financial status of the company when reading together Cash Flow Statement. (Also see Bookkeeping – Cash flow Statement) Such a report also plays a significant role in persuading investors.
In loan, the majority of lenders would wish to read the Statement of Comprehensive Income along with the Statement of Financial Position (Also see Introduction to Financial Statements) , which is the balance sheet of the company. This is a long journey to advice on the business’s capability to repay, and if the financial investment is economically viable.
The Statement of Comprehensive Income is one of the beginning point or the source for an audit task. Clear records make it simpler to explain the financial engagements of any companies to auditors.
The Statement of Comprehensive Income makes it possible for businesses to prepare useful and precise forecasts. Projections are important in every business; it assists the company in protecting itself from preventable losses. Allocations could be made according to the records from the statements.