Small business accountant: All you need to know about financial statements
What is a financial statement? It is compilation of accounting information that is prepared at the end of an accounting period. With other information like letter from the top management and explanatory footnotes, it is a financial report.
Who reads financial statements? Surprisingly, it’s not the accountants. The main target audience who reads these statements or reports are the investors and even managers – the non-accounting people.
The main elements in a financial statement are the profit/loss, financial condition and the strength of the cash flows. Read a financial report can be a challenging task. To find out what is the bottom-line profit/loss, go straight to the income statement and look at the final figure at the end of the statement. It summarises revenue, income and expenses. To find out about assets and liabilities, you need to look at the balance sheet.And finally, go to the statement of cashflows for cash flows problems.
Having a financial statement is very important as it provides small business owners with information to run a business and make decisions according to the company’s current financial situation.
mas accountant is a team of small business accountants who takes pride in providing clients with accurate accounting reports so that they can make better decisions for their small businesses in Sydney and Melbourne.