When we already have a business that is developing and starting to involve many parties in it, then we have an obligation to make a good financial report, so that it can be developed into a financial statement analysis that will be useful for developing the business. By hiring an accountants nottingham, you have the chance to prevent or avoid any mistakes which are potential to make during analyzing the financial statement.
The financial analysis itself has benefits and objectives to find out a financial position in a certain period, know the weaknesses and strengths of the company, and know the steps that must be taken to improve what needs to be done for the assessment of management performance. Because of the importance of this financial statement analysis, even a very small mistake will have a major impact on your business.
Failure to Distinguish between Accrual-Based and Cash Accounting
Cash-based accounting is the process of recording accounting transactions where transactions are recorded when receiving or issuing cash. On a cash basis, income is recorded when receiving cash, while costs are recorded when issuing cash. For example, in this cash-based method, revenue has not been recorded even though the goods or services have been provided to the customer.
Mistaken in Classifying a Cash Flow
If cash flow is bad, it will make the business run completely paralyzed. That means you have no other money to develop the business.
Error Grouping in the Balance Sheet
Grouping assets and liabilities often place a person in the mistakes made in making a balance sheet. If you unconsciously place long-term obligations in the wrong column, then you can indirectly increase the amount of debt that must be paid in the coming year, and potentially cause you to lose the client or capital investors because you will appear less stable on paper.