In financial management and accounting, the statement method and the account settlement method are two commonly used closing methods. There is a clear difference and connection between these two methods when it comes to dealing with period-end closing. This article will detail the differences and connections between the statement method and the account settlement method, in order to help readers better understand and apply these two methods.
2. The difference between the statement method and the account settlement method.
Definitions and Purpose.
The statement method is a method of closing accounts at the end of the period, which reflects the financial position and operating results of an enterprise in a certain accounting period by preparing financial statements. The method of accounting is to calculate the profit and loss of the current period by carrying forward the income, expenses, profits and other accounts of the current period at the end of the period. The purpose of both is to summarize and evaluate the financial position and operating results of the enterprise at the end of the period.
How it works. Under the statement method, the preparation of the financial statements at the end of the period is the main work, and the enterprise only needs to fill in the balance of each profit and loss account according to a certain method to obtain the profit and loss for the current period. Under the accounting method, the enterprise needs to carry forward the balance of the income, expenses, profits and other accounts of the current period at the end of the period to calculate the profit and loss for the current period. Therefore, the operation of the statement method is relatively simple, while the operation of the account settlement method is relatively complex.
Impact on financial statements.
Since the statement method reflects the financial position and operating results of an enterprise through the preparation of financial statements, its financial statements reflect the financial position and operating results of an enterprise in a certain accounting period. Under the accounting method, the current period data in the statement is calculated based on the balance of the income, expenses, profits and other accounts in the current period, so the financial statement reflects the financial status and operating results of the enterprise in the current period.
3. The connection between the statement method and the account settlement method.
It's all a period-end closing method.
Whether it is the statement method or the account settlement method, it is a method for summarizing and evaluating the financial status and operating results of an enterprise at the end of the period. Both methods are designed to provide accurate and complete financial information to help business decision-makers understand the financial health and operating results of the business so that they can make the right decisions.
All involve the carry-forward of the balance of the profit and loss account.
In both methods, the balance of the profit and loss account needs to be carried forward at the end of the period. Regardless of whether it is the statement method or the account settlement method, it is necessary to fill in or carry forward the balance of each profit and loss account according to a certain method to calculate the profit and loss for the current period. Therefore, there is a certain connection between the two methods in terms of balance carry-forward of profit and loss accounts.
IV. Conclusions. Closing and closing are two different methods of closing the books at the end of the period, and there are clear differences in their definitions, how they operate, and the impact of their financial statements. However, both methods are designed to provide accurate and complete financial information to help business decision-makers understand the financial health and operating results of the business. In practice, businesses should choose the appropriate checkout method according to their own situation and business needs. At the same time, with the continuous improvement of enterprise accounting standards and the development of accounting informatization, the application of the statement method and the account settlement method will also be continuously improved and perfected.