How to prepare the most accurate and complete annual financial statements

Preparing financial statements is the accounting department’s task that needs to be completed at the end of the year, aiming to summarize the results of production and business activities. Because this report will be handed in the state, Viindoo is going to guide businesses to prepare extremely detailed financial statements through the following article.

What are financial statements?

A financial statement is a document that summarizes all information about an enterprise's business situation, cash flow fluctuations, etc. In this report, it is crucial to have all the following basic contents:

  • Balance sheet: Provides an integrated picture and assesses timely the financial "health" of a business. The function of the balance sheet is to reflect the financial situation of a company through the statistics of assets, sources of capital, and liabilities.
  • Income statement: This is a table of data on operating costs, sales, and profits of the business in a past period.
  • Cash Flow Statement: Provides detailed figures of a company's cash inflows and outflows over a period of one month to one year. Based on this report, businesses can know what items they spent and invested in the past months.
  • Notes to the financial statements: This is a detailed analysis of the information and data mentioned in the balance sheet, results of operations, and cash flows.
Regulations on preparing financial statements that businesses need to know

Regulations on preparing financial statements that businesses need to know

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How to prepare annual financial statements

Step 1 - Arrange accounting documents

Arrangement of accounting documents is the first stage of the annual financial statement preparation process. Accountants need to ensure that the documents are carefully chronologically arranged. This will facilitate the step of reporting and re-checking the report.

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Step 2 - Accounting for arising economic transactions

The accounting department of the company checks and completes the documents based on the previously arranged paperwork. Enterprises should note that these documents must be valid according to the state's regulations on accounting and tax.

Accounting for arising economic transactions

Accounting for arising economic transactions

Step 3 - Classification of arising transactions

For this step, accountants classify incurred expenses such as depreciation expenses, prepaid expenses, etc. helping to make the results of declaring annual financial statements more proper and accurate.

Step 4 - Review and summarize arising transactions by account groups

The implementation of this step helps the process of integrating declared information in financial statements faster and more accurately.

  • Group of inventory: Accountants check the company's inventory situation. If the inventory quantity is negative, the accountant needs to find out the cause as well as come up with appropriate adjustment solutions to the situation.

  • Group of receivables and payables: The accountant checks the fees incurred by the two parties, the payable and the receivable based on the year-end liabilities report. Then, the accountant will estimate the risks in debt and tax.

  • Group of investments: The accountant checks, re-analyzes, and proposes a method of accounting for the projects invested in the year in order to balance.

  • Group of prepaid expenses: Verify the accuracy of the statement is actually correct by checking the prepaid charges.

  • Group of fixed assets: When reviewing this group of accounts, accountants need to strictly comply with the provisions of the law.

  • Group of revenue: Based on the market price, the accounting department will check the sales of the product, evaluate the fluctuation of the selling price, and indicate the cause of that fluctuation.

  • Group of cost: The cost of each product or service code must be accurately reflected in gross profit.

  • Group of general and administrative expenses: Ensure profile, expense-to-revenue ratios, and accounts are consistent with reality and accounting principles.

Especially, when the accounting department checks and reviews the above groups and discovers errors, it is necessary to quickly find out the causes and come up with an adjustment method. Thus, the new financial statements ensure accuracy.

Step 5 - Summarizing and deferring accounting entries

The next step in the financial statement preparation process is the general accounting entry and deferred costs, revenues, and profits. In addition, accounts beginning 5 through 9 should also be guaranteed to have no ending remainder.

Step 6 - Prepare financial statements

After completing the above 5 steps, the accountant will conduct the annual financial statement on the tax declaration support software to complete the declaration according to the following instructions:

  • Signing in to the tax declaration support software with your business account.

  • Clicking on "Financial statements" in the main interface and then selecting the accounting mode that applied to select a set of reports to declare.

  • Entering all requirements information when the screen pops up the box “Financial statement", then click on the box “Agree" and wait until the screen shows the box “Enter declaration"

  • Entering all the information in the "Enter declaration" section. When you get things done, click the “Record” box. Then, the screen pops up "Successfully recorded data", meaning the process is completed.

  • Clicking on the box "Render XML" and uploading the exported file to submit to the tax office is the last step.

Instructions for submitting financial statements online

Currently, businesses do not need to go directly to the unit for submitting financial statements, but accountants can easily submit them online with simple and quick steps.

Step 1: Access the website

The main interface of the Electronic Tax website

The main interface of the Electronic Tax website

Step 2: Click on the "Business" box displayed on the main interface and then proceed to log in with the company's account.

Log in to your account

Log in to your account

Step 3: Click on “Tax declaration” and then select “Submit XML declaration”. Then, the accountant should proceed to upload the file after clicking on the box "Select declaration file".

XML declaration submission interface

XML declaration submission interface

Step 4: Click on "Electronic signature" box to sign the book.

After submitting the declaration, choose to sign electronically

After submitting the declaration, choose to sign electronically

Step 5: Select “Submit declaration”

Click to submit the declaration

Click to submit the declaration

Step 6: Submit the appendix of the report and balance sheet

Submitting appendix and balance sheet

Submitting appendix and balance sheet

Step 7: To complete the procedure, the accountant should click on the box "Submit declaration".

Completing the online financial statement submission is simple

Completing the online financial statement submission is simple

Regulations on deadline for submission of annual financial statements

The deadline for submission of financial statements for 2022 according to the State's regulations is on March 31, 2023. Companies and businesses should monitor deadlines to ensure that they are not submitted later than the stipulated time to avoid potential problems.

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The cash flow statement focuses on a company's cash inflows and outflows during a given period. It provides insights into the company's operating, investing, and financing activities, helping assess its liquidity and cash management.

Financial statements are used by various stakeholders, including investors, lenders, shareholders, management, analysts, and regulatory authorities. They rely on these statements to make informed decisions about investments, credit, and financial performance.

Yes, companies often undergo financial statement audits conducted by independent auditors. Audits provide assurance on the accuracy, completeness, and fairness of the financial statements, enhancing their credibility.

How often are financial statements prepared?

Financial statements are typically prepared annually for external reporting purposes. However, companies may also prepare interim financial statements on a quarterly or semi-annual basis to provide regular updates on their financial performance.

It can be seen that prepare financial statements require the care and accuracy of the accounting department. Therefore, in order to make financial statements more automatic, fast, and accurate, businesses can use Viindoo Accounting software. Immediately contact the hotline at +84 225 730 9838 if your business needs more advice on this accounting software.

How to prepare the most accurate and complete annual financial statements
Viindoo Technology Joint Stock Company, Trần Thị Lâm Anh December 9, 2022