Creating Financial Statements Checklist

Section 1: Preparing the Financial Statements

Gather relevant financial data and supporting documents

Income statements

Balance sheets

Cash flow statements

General ledger entries

Bank statements

Invoices and receipts

Payroll records

Expense reports

Verify the accuracy and completeness of the data

Reconcile bank statements with general ledger balances

Review and correct any errors or discrepancies

Ensure all transactions are recorded and classified correctly

Confirm the accuracy of supporting documents

Organize the financial data

Create separate folders or files for each financial statement

Label and arrange the documents in a logical order

Ensure all necessary information is included and easily accessible

Section 2: Preparing the Income Statement

Gather all income and expense data

Calculate gross profit and net income

Calculate operating expenses

Calculate non-operating items

Calculate income taxes

Ensure the income statement equation balances

Prepare the final income statement

Obtain management approval

Distribute and file the income statement

Organize the income statement data

Create a summary of the income statement

Create detailed charts and graphs of the income statement

Compare year-over-year performance

Calculate revenue and sales figures

Summarize all sales transactions

Include any other sources of revenue (interest income, rental income, etc.)

Deduct any sales returns or discounts given

Determine the cost of goods sold (COGS)

Calculate the cost of raw materials, labor, and overhead used in production

Subtract the COGS from the revenue to calculate the gross profit

Calculate operating expenses

Identify and categorize all expenses incurred during normal business operations

Include salaries, rent, utilities, advertising, insurance, etc.

Subtract the total operating expenses from the gross profit to determine operating income

Include non-operating items

Include any gains or losses from investments, interest income, or extraordinary items

Adjust the operating income accordingly

Calculate income taxes

Determine the applicable tax rate and calculate the income tax expense

Subtract the income tax from the adjusted operating income to calculate net income

Section 3: Preparing the Balance Sheet

List assets

Categorize and record all current and non-current assets

Include cash, accounts receivable, inventory, property, equipment, etc.

List liabilities

Categorize and record all current and long-term liabilities

Include accounts payable, loans, mortgages, accrued expenses, etc.

Calculate owner's equity

Determine the retained earnings or accumulated deficit

Include any additional paid-in capital or other equity accounts

Ensure the balance sheet equation balances

Assets = Liabilities + Owner's Equity

Adjust and reconcile any discrepancies

Section 4: Preparing the Cash Flow Statement

Classify cash flows

Categorize cash flows into operating, investing, and financing activities

Include cash receipts and payments related to sales, investments, loans, etc.

Calculate net cash flow from operating activities

Determine the net change in cash from day-to-day business operations

Include cash received from customers, cash paid to suppliers, etc.

Calculate net cash flow from investing activities

Determine the net change in cash from investment-related activities

Include cash from the sale or purchase of assets, investments, etc.

Calculate net cash flow from financing activities

Determine the net change in cash from financing activities

Include cash from issuing or repaying debt, equity transactions, dividend payments, etc.

Reconcile cash flow statement with the change in cash balance

Confirm that the net increase or decrease in cash matches the actual change in cash

Section 5: Reviewing and Finalizing the Financial Statements

Perform a comprehensive review

Cross-check all figures and calculations for accuracy

Ensure consistency between the financial statements and supporting documents

Verify compliance with applicable accounting standards and regulations

Make necessary adjustments

Correct any errors or omissions identified during the review

Adjust account balances or classifications if needed

Update the financial statements accordingly

Prepare the final financial statements

Transfer all calculated figures and adjustments to the official financial statement templates

Ensure proper formatting, labeling, and presentation of the statements

Obtain management approval

Share the draft financial statements with relevant stakeholders

Obtain management's review, approval, and sign-off on the final statements

Distribute and file the financial statements

Share the final financial statements with key stakeholders (investors, lenders, regulatory bodies, etc.)

Retain copies of the financial statements for future reference and compliance purposes