Prepare a retained revenue statement for the current year. This statement provides the financial information of the company, but it actually details a single record for the year – the retained earnings. For instance, it doesn’t include income from additional investments or profits on assets which are still held by the corporation. It does, however, show how the retained earnings have been used to run the business during the year.
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There are many reasons why corporations prepare separate statements for their earnings. One reason is simply so they can issue their annual report to stockholders with the accurate accounting information. Investors will rely on the accountant’s reports to make a decision as to whether the company is worth buying or not. If the earnings reports are inconsistent with the accounting records, the investor may choose not to buy the stock. To this end, the accountant has to prepare and produce a reliable statement of earnings which is free of conflicts of interest.
The basic information in a statement of retained earnings is the net income or cash flow from continuing operations. The financial term “net income” refers to the total amount of money earned minus the total cost of goods sold or produced plus a profit. An accountant can divide an operating revenue statement by either the current or the previous year to produce two different financial periods. The following sections explain how to prepare a statement of retained earnings by using a template.
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The financial reporting period is the accounting period in which the statement of earnings is prepared. Dividends are reported on the equity statement along with other information such as retained earnings, paid-in capital, and other charges. The statement of cash flows shows net income and other factors that have an effect on the balance sheet. A corporate cash flow report provides the basis for the issuance of dividends.
A number of accounting statements describing the process of measuring, reporting, and distributing profits are presented. Under the statement of retained earnings definition, there is a description of three different methods of measuring retained earnings: the first is the volume or frequency measurement method, which uses historical purchases and sales prices to calculate expected future retained earnings; the second is the gross value method, which uses actual receipts to calculate future cash flows; and the third is the market value method, which uses estimates of future sales prices to calculate current and retained earnings. Quotations are made for these methods using the appropriate current and short-term price. If a company uses more than one method to calculate its level of earnings, more than one statement should be included in the annual report.
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The statement provides financial information required by Regulation D-U-N. Obtaining this information requires obtaining the audited financial statement from an accredited public accountant. This information is also needed if the company intends to file its most recent annual report with the Securities Exchange Commission (SEC). The SEC requires that companies provide the name of the CPA, his or her address, the firm for which they work, and their telephone number.
The accounting statement provides financial position information required by Regulation D-U-N. This requirement was enacted as part of the Sarbanes Oxley Act. As part of Regcure, the firm must prepare and submit to the SEC a consolidated statement of financial position which has been prepared in accordance with generally accepted accounting principles. The purpose of the consolidated statement of financial position is to provide an accurate portrayal of the Company’s financial position and all material U.S. tax liabilities. The statements also provide management’s overview of the company’s ongoing operation, which assists management in planning and dealing with problems that may arise.
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The fourth section of the template is the statement of cash flows. Here, management enters the effect of dividends paid, capital gains, and other cash payments reported on its last balance sheet, and the net cash flow from operating activities. Cash paid in to the shareholders is reflected in the statement of cash flows. Management can also enter the effect of adjustments to accounts receivable and accounts payable. For the reporting period covered by this template, management also reports its gross selling price in conjunction with gross selling prices and working capital.
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