Balance Sheet and Income Statement

The balance sheet and the income statement are two of the most important financial documents that every company must prepare on a regular basis. They provide a detailed overview of a company’s financial situation and are therefore of central importance for stakeholders, investors and management.

As trustees, it is our responsibility to ensure that these documents are prepared correctly, transparently and in accordance with applicable accounting standards.

The Balance Sheet

The balance sheet represents a snapshot of a company’s financial position at a specific point in time. It shows what the company owns (assets) and what it owes (liabilities).

Assets:
The asset side lists items such as cash, receivables, inventories and other assets. These are divided into current assets (short-term available or realisable) and non-current assets (long-term investments).

Liabilities:
The liability side shows liabilities and equity. Liabilities can be short-term (for example trade payables) or long-term (for example loans). Equity represents the value attributable to the owners of the company.

The Income Statement

The income statement, often referred to as the profit and loss statement, shows how much profit or loss a company has generated over a specific period, such as a financial year. It lists all income and expenses and compares them.

Income:
This includes revenue, interest income and other earnings.

Expenses:
This includes costs such as material expenses, personnel costs, depreciation and interest expenses.

The difference between income and expenses results in the company’s profit or loss for the period.

The Role of the Trustee

As trustees, we play a key role in the preparation and review of these financial documents.

Advisory:
We advise our clients on best practices in accounting and financial reporting to ensure compliance with applicable standards and regulations.

Review:
We review the company’s accounting records to ensure that all transactions have been recorded correctly and that no inconsistencies exist.

Preparation:
Based on the reviewed accounting data, we prepare the balance sheet and the income statement, ensuring that all items are correctly classified and valued.

Analysis:
After preparation, we analyse the financial statements to identify trends, risks and opportunities. This provides valuable insights to support management decision-making.

Communication:
We communicate the results clearly to our clients and provide explanations and recommendations so that the financial information is fully understood.