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Simple Business


2.1.6.4. Statement of Capital Transfers
A statement of capital transfers is not a standard financial statement.
However, a statement of capital transfers may be useful in managing the
business, and presenting a clear picture of the capital actions of the business
during the previous period.
The standard financial statements of the balance sheet and profit -and-loss
statement are built on the fra me work of accounting.
The ma jor purpose of accounting is to record the holdings and transfers of
assets.
While this is an essential part of business and is a useful input into business
manage ment, it may not always present information in a way that shows a
clear p icture of the business and its recent operations.
The three ma jor financial statements have the following uses:
Ba lance Sheet
The financia l structure of the business, and it's
current holdings .
Profit and Loss Statement The net income, profit or loss involved from
operating the business . This information can be
used to determine ma rgins .
Cash Flow State ment
The flo ws of cash into and out of the business.
This can be used in the manage ment of cash
flow.
A statement of capital transfers can be compiled using informat ion the other
three statements.
The balance sheets presents a static view at a ce rtain period of time, while the
other three statements present information regarding flows in the following
ways:
Profit and loss statement
Flows of va lue to or fro m the shareholders.
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