The Different Between the Formats of Financial Statements (Income Statement and Balance Sheet) for Different Types of Business Such as Sole Proprietorship, Partnership and Limited Company
The different between the formats of financial statements (income statement and balance sheet) for different types of business such as sole proprietorship, partnership and limited company
Each company will have different economic sectors so they use different financial statements with different format that satisfy those sectors. The financial statements collect the financial records form the sales and purchases produce, the net taxable profit or loss for each month. Different types of business use different formats.
For sole traders, the financial statement for sole traders is simple; because the report is just serve for the owner of the company. So, it is not complex, it may not have the balance sheet and income statement. The report just needs to show the profit and loss account compared to a public limited liability company which will have to prepare based on international financial reporting standard (IFRS) and generally accepted accounting principle (GAAP). If financial statements are not prepared based on standards it is difficult to compare with other organisations.
For partnership, the financial statement has relation to the interests and the profit of the ones contributes the capital of the company. The target of the financial statement is shown the balance sheet, profit, income, outcome and the loss statement. When making financial statements, the income statement would usually be prepared first because the net income or loss becomes a part of the statement of partners’ capital. The statement of partners’ capital is prepared second because the ending partners’ capital balances become part of the balance sheet. The statement just focused on analyzing the capital and profits of the company that are is circulated inside the company.
For limited company, the financial statement must reflect the current, non-current assets, liabilities, sales, profits, cost of income tax payable and earning per
Each company will have different economic sectors so they use different financial statements with different format that satisfy those sectors. The financial statements collect the financial records form the sales and purchases produce, the net taxable profit or loss for each month. Different types of business use different formats.
For sole traders, the financial statement for sole traders is simple; because the report is just serve for the owner of the company. So, it is not complex, it may not have the balance sheet and income statement. The report just needs to show the profit and loss account compared to a public limited liability company which will have to prepare based on international financial reporting standard (IFRS) and generally accepted accounting principle (GAAP). If financial statements are not prepared based on standards it is difficult to compare with other organisations.
For partnership, the financial statement has relation to the interests and the profit of the ones contributes the capital of the company. The target of the financial statement is shown the balance sheet, profit, income, outcome and the loss statement. When making financial statements, the income statement would usually be prepared first because the net income or loss becomes a part of the statement of partners’ capital. The statement of partners’ capital is prepared second because the ending partners’ capital balances become part of the balance sheet. The statement just focused on analyzing the capital and profits of the company that are is circulated inside the company.
For limited company, the financial statement must reflect the current, non-current assets, liabilities, sales, profits, cost of income tax payable and earning per