Financial Statements Preparation
Financial statements are a financial guideline that will help you make better decisions. In many cases, financial statements are expected by the government, lenders, shareholders and on occasion, trust beneficiaries. However, the most common reason for having financial statements prepared is because they are critical for preparing a corporation’s income tax return.
Compilation (also known as Notice to Reader or NTR) financial statements is lower in expenses, however, it does not provide assurance. An accountant will compile the information into a standardized reporting format while adhering to professional standards as opposed to providing an opinion, or conclusion, about the reliability of the financial information. There is a large amount of work that must be performed to prepare the financials. It is through this process, that an accountant will become aware of the key items that are reflected in the income tax return.
Compilation, a common form of preparing financial statements, are marked as being unaudited and are often all that is required when preparing most small business tax returns. Furthermore, compiled financial statements are not required to follow Generally Accepted Accounting Principles (GAAP).
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