12. Accounting. Financial statements

Accounting is the recording, classifying, summarizing and interpreting of the business activities that can be expressed in monetary terms. Accountancy is sometimes used as alternative expression expecially for the practice of accounting.

Accounting information can be classified into two categories financial accounting or public information and managerial accounting or private information.

Accounting in any country reflects the level of its economic development to some extent. A new phase of accounting development in Ukraine began on January 1, 2000, when the Law On Accounting and Financial Reporting in Ukraine and the Accountong Standards (provisions) of Ukraine came into force. The Verkhovna Rada of Ukraine adopted the Law on July 16. This day is now celebrated as a professional holiday, the Accountant’s Day.

The annual financial statements of enterprises comprise the following: Balance sheet, Income statement, Cash flow statement, Owner’s equity statement, Notes to the annual financial statements.

The balance sheet shows the financial position of a business on a certain date, usually the end of the month or year. The accounting equation of the Balance sheet is: Assets = owner’s equity+liabilities.

The income statement is a statement summarizing the firm’s revenues and expenses over an accounting period, generally a quarter or a year.

Cash Flows statement – a statement reporting the impact of a firm’s operating, investing and financial activities on cash flows over an accounting period.

Statement of owner's equity. The statement of owner's equity is prepared after the income statement. It shows the beginning and ending owner's equity balances and the items affecting owner's equity during the period. 

Notes to the financial statements report the details and additional information that are left out of the main reporting documents, such as the balance sheet and income statement. This is done mainly for the sake of clarity because these notes can be quite long, and if they were included, they would cloud the data reported in the financial statements.

13.Аудит.

Audit (English auditor - auditor) - services to evaluate the financial statements of the company in view of the accuracy of the information and opportunities for the firm in business.

The external audit conducted by the special audit firm, explains: enforcement of accounting and reporting of transactions, which provides corporate enterprise, the state of internal controls in a corporate enterprise and its assessment, compliance with corporate enterprise provisions of laws and regulations of Ukraine of economic objectives established by a general meeting of owners.

nternal Audit carries out an internal audit service companies that periodically review and evaluate: a) the adequacy and effectiveness of systems and internal process control, and b) management of economic and financial risks, c) the completeness, timeliness and accuracy of financial and other reports, d) compliance with the principles and internal accounting procedures and e) compliance with regulatory requirements.