![]() Statement of Retained Earnings - A statement that outlines the changes in retained earnings for a certain period of time. The cash flow statement is broken down into the incoming and outgoing cash for three different components: operations, investing, and financing. Statement of Cash Flows - A statement that records the amount of cash and cash equivalents entering and leaving a company during a certain period of time. Unlike the balance sheet, the income statement provides performance information about a specific accounting period. It starts with sales figures (revenues) and ends with the company’s overall net income (profit or loss) for the given accounting period. The statement details how a business incurs its revenues and expenses through both operating and non-operating activities. ![]() Income Statement - This document can also be called a statement of revenue and expense or a profit and loss statement. This is the most important document not only when it comes to underwriting a certain company’s overall bondability but also when it comes time to determine a company’s current and future bond capacity. The balance sheet is a single snapshot in time and can, therefore, be different from one day to the next. Total Assets = Total Liabilities + Shareholders’ Equity. The two sides of this statement must balance. The statements needed include the balance sheet, the income statement (also known as a profit and loss statement), the statement of cash flows, and the statement of retained earnings.īalance Sheet - A statement that presents everything a company owns, or its assets, and how the company pays for those assets, either by borrowing money (liabilities) and/or by acquiring it from investors (shareholders’ equity). Sureties require this method of accounting and prefer these statements to be prepared in the form of an audit (ideal) or a review, as this provides some level of assurance on an organization’s financial statements. GAAP prescribes the use of the percentage-of-completion method of accounting for construction contracts. It is important to provide statements that are prepared by an independent Certified Public Accountant (CPA) using Generally Accepted Accounting Principles (GAAP). Surety companies will require the fiscal year-end corporate financial statements for the last three years as well as copies of the most recent in-house statements. Although this may seem over the top and at times very private, rest assured knowing that these requirements are standard industry practice. Below is a list of the documents and information, and how they should be presented, that surety companies typically require in order to begin the underwriting of any company for a surety bond program. Teaming with an experienced bonding agent can alleviate many headaches, as the agent will assist in collecting and reviewing the required documents before submitting them to a surety carrier. ![]() During the initial phase of underwriting, a surety company will require an extraordinary amount of information from the construction company and its owners. Comprehensive List of Items Needed to Establish a Surety RelationshipĮstablishing a surety relationship is not something that primarily happens overnight.
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