Business people in Singapore should have knowledge in their fingertips to succeed. As much as business in this state is very lucrative, it does not mean that things are automatic. Success in business lies in understanding finances, customers and the products. For today, we will discuss the documentation that helps the owner to understand their business financially.
After knowing how to apply entrepreneur visa in Singapore and successfully doing it, it is now time to guard the business you have invested in by understanding the important financial documents. It is the only way to know if it is taking the right trend or not.
The Balance Sheet
The document is important as it tells the owner of the status of the business in relation to capital, assets and the liabilities. It can be prepared on any day when one asks for it. The finance and accounting department is in charge of preparing this report.
Capital is the financial need to buy the products that directly support a business in its operation. The money needed to buy raw materials for production is the capital of a business. Assets can include all the physical items that a company owns and the investments it has made. Finally, the liabilities include surplus, capital and loans.
The Trial Balance
Simply said, the trial balance will show the investor how income and expenditure are relating as entered on a double entry method. Accountants need to capture every detail well so that any business will clearly tell whether it is making profit or loss. This financial statement will show whether the debit and credit side will balance. Those that do not balance create a sign that something is not right and an investigation is important here.
The audit department may have to go through all the sales entries in the system against the physical indicators to prove that all income is captured well. The procurement will also have to undergo scrutiny to identify any problem from their side. At the end of the day, the two sides need to balance or have acceptable differences.
Profit and Loss Statement
Here comes the third financial document that any business person in Singapore must understand by all means. This indicates all the revenues centers and the amount of money that is coming into the company. Simply, it is a way to show whether the business is making any profit or loss during its operations. The accounting experts will use a simple equation:
Revenue – Cost = Profit/Loss
When the resulting figure is positive, then the business can be happy that it is doing well. A negative figure will show that the costs are more than the revenue which is a loss. This way, there is a need to strategize on how to increase the revenues and lower costs. In other times, the resulting figure may be a zero. In accounting terms, the business has reached a break-even point. It should now focus on making a profit.
These statements are the most crucial financial documents that the business owner or manager in Singapore should assess closely. They are the best guide to success not only in Singapore but all over the world.