The final financial statements, taking as an example the statements for M1, are prepared after the arithmetic verification in the Trial Balance. The verification in the Trial Balance means that all debit and credit entries in the period for which statements are prepared have been correctly performed. The preparation of financial statements following these procedures applies to all fiscal periods from month one (M1) to year four (Y4).
Now we have been over the various worksheets: balance sheet, income statement, cash flow statement and changes of equity statement we can look at the final financial statements, through which we can clearly see how much money has been spent, invested, made and credited to the company through which we can understand the state of its finances.
Income Statement or Profit and Loss Statement
The Exhibit below shows an Income Statement, in this case for M1 in vertical format. The balances correspond to the same balances in the Income Statement column in the Trial Balance worksheet above. The vertical format of the Income Statement is the one most frequently used by companies.
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