3. Financial Statements Modelling using Microsoft Excel

Successfully completed the hands-on guided project on creating financial statements using Microsoft Excel offered by Coursera Project Network!
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Financial Statements:

Financial statements are reports that provide a company or business's financial performance and status. These reports are used by the people interested in the company like the investors, creditors, shareholders and other stakeholders to make valuable decisions about the company. The three primary financial statements are the Balance sheet, Profit and loss statement, and cash flow statement.

In this project, the balance sheet is modelled along with transaction statements and profit and loss statements.

Transaction Statement: This statement provides the list of all transactions that have happened in a company or an account over a period of time. This statement is issued mainly by a bank or financial institution.

In the above Excel sheet, the transactions statement includes five columns that describe the category, date, month, amount and description of transactions that happened in the months from January to March. The negative in the amount shows the cash spent and the positive shows the cash received.

Profit and loss: The profit and loss statement also known as the income statement shows the total revenue, expenses and net income of a company over a time period. The income is the money that a company earns after selling its product or services. Expenses are the money spent by the company in order to generate revenue.

Balance sheet: This financial statement mainly shows three important factors of a company — assets, liabilities, and equity at a particular period of time. Assets show the things that are owned by a company like cash, inventory, and property. Liabilities show the loans and accounts payable by the company. Equity is calculated by taking the difference of the assets and liabilities of the company and it shows how well a company is.

The above Excel sheet shows the balance sheet of the company. The main categories in the balance sheet are the assets, liabilities and owner’s equity.

The assets include categories like cash and cash equivalents, current assets and property,plant and equipment. The liabilities include current and non-current liabilities.

The balance check is calculated at the end to verify the total assets and total liabilities plus shareholders equity. It is calculated by taking the difference of total assets and total liabilities plus shareholders equity. If the balance check is zero, then the balance sheet is balanced or else there is an error and the balance sheet should be corrected.