The most common financial statements used are the Profit & Loss and the Balance Sheet.
The Profit and Loss Statement shows if your business is making a profit or taking a loss. It is a record of your income and expenses over a specific amount of time. That time is most commonly one month, one quarter, or the full fiscal year.
The Balance Sheet is the statement that lists your assets, liability and equity. This statement is gives a snapshot of what the company owns (assets) and owes (liabilities) to others as of the date the Balance Sheet is created. This statement also shows the Owners (Sole Proprietor) or Share Holders Equity. You can also compare the Balance Sheet in different periods to see how the business is doing.
While these two financial statements are well known, there is a third financial statement that is important, the Cash Flow Statement. All three of these financial statements, along with other forms of information, are used to analyze the financial health of your business. This is why I feel it is important for business owners to look at their financial statements on a regular bases.
As an accounting professional, I don't expect my clients to fully understand how to read these statements, though I am sure many are quite able to. They also have me (or their CPA) to ask questions when needed.
Here on this blog, I hope to educate you, a business owner, the best I can, on how to look at your Profit and Loss and Balance Sheet so you can garner some valuable information to help your make business decisions.
Next blog, The Profit and Loss Statement in more detail. If you want to be notified of the post, join my mailing list. You will be glad you did! You will also receive a Final Wishes Estate Planner for free as a thank you for sharing your email with me. (Don't worry, I promise not to share your info with anyone else, that is just rude!)
If you have any further questions about this or other bookkeeping subjects, please contact me at Rebecca@RHBizSolutions.com. I look forward to talking to you about your bookkeeping needs.
Here's To Your Success!
RH Business Solutions
Any accounting, business or tax advice contained in these articles, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Please seek consultation from the appropriate accounting/tax professional.