Low Cost High Quality Business Process Outsourcing (BPO) Services in the Philippines

Business Process Outsourcing is a booming industry in the world today. For companies, there are lots of advantages they can get from outsourcing their business processes from third parties. One of these advantages is the reduction of administrative works (e.g., accounting, information technology, business research, etcetera) resulting into the concentration of the company’s core operations. Moreover, business process outsourcing promises a lower cost than hiring an internal employee who will do the certain task. The expertise and experience of BPO providers also contribute to these advantages. Read more

The Importance and Uses of Notes to the Financial Statements

The complete set of financial statements include the balance sheet, income statement, statement of changes in equity, cash flow statement and notes to the financial statements. If you will read the first four financial statements mentioned above, you will see notes referring to numbers after each accounts in those financial statements. At the footer of the balance sheet, income statement, statement of changes in equity and cash flow statement, you will see a phrase saying “see accompanying notes to the financial statements” or “the accompanying notes are integral parts of these financial statements”. The first four financial statements are linked to the notes to the financial statements to provide clearer and complete financial information to the users of financial statements. Read more

Knowing and understanding what is Statement of Changes in Equity

A statement of changes in equity shows all changes in owner’s equity for a period of time. According to IAS 1, this statement of financial reporting is one the five components of complete financial statements (balance sheet, income statement, statement of changes in equity, statement of cash flow and notes to financial statements.

IAS 1 requires an entity to present a statement of changes in equity as a separate component of the financial statements. The statement must show: [IAS 1.96]

(a) profit or loss for the period;

(b) each item of income and expense for the period that is recognised directly in equity, and the total of those items; Read more

How to Compute Profit for a Service Provider Company

A service company is one that sells services to its clients. Different from manufacturing and trading companies, it provides services or works of labor rather than tangible products to its customers. Accounting firms, law firms, schools, janitorial and hotel companies are some of examples of service provider companies. As the operation of this kind differs from the others, the computation and preparation of its statement of operation also differs. Since a service company sells services, we need to compute its cost of services, as computing cost of goods sold in a manufacturing and trading firms which sells goods to its costumers. But in all kind of firms, we compute direct and indirect costs to determine gross and net profit.

The revenues of a service company consist of all its receipts and receivables from rendering services during the period less all refunds associated from them. Unearned revenues collected during the period are not included because they are not related to the services rendered during the period. This concept is called accrual basis. Read more

Sample one-year and two-year comparative balance sheet statements

In my previous post, I wrote about understanding the balance sheet. Balance sheet shows the financial condition of a particular business entity. Reading and understanding balance sheet is very important for short-term and long-term analysis. This statement is the ultimate financial statement since income statement’s net profit is forwarded and closed in the retained earnings (which is shown in the equity section of the balance sheet); cash flow statement is netted to cash and reported as current asset in the asset section of the balance sheet; and the equity in the statement of changes in equity is also forwarded as equity in the balance sheet. Read more

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