The three types of financial statements are the Income Statement, Balance Sheet, and the Statement of Cash Flows.
Income Statement: Shows all items of income and expense for your business. It's also called a profit and loss statement.
The income statement reflects a specific time frame. For example an income statement for the quarter ending March 31 shows revenue, and expenses for January, February, and March. If the income statement is for the calendar year ending December 31, it would show the info from January 1 to December 31.
The very bottom line of an income statement is income minus expenses. If your income is more than your expenses, you will have a net profit. If your expenses are more than your income, you have a net loss.
Balance Sheet:
Assets = Liabilities + Owner's Equity. However you can also Assets -Liabilities to get owner's equity.
Assets are everything your company has. It includes cash on hand, accounts receivable, and the value of your current inventory along with any equipment or property you own.
Liabilities are what you owe such as your bills, loans, and other costs.
Owner's Equity is your share of the business or how much you've invested.
The balance sheet shows the health of a business from day one to the date ending on the balance sheet. Balance sheets are always dated on the last day of the reporting period. Let's say you've been in business since 2010 and your balance sheet is dated as of December 31 of the current year. The balance sheet will show the results of your operations from 2010 to December 31.
Statement of Cash Flows:
The statement of cash flows shows what fund have come in and what funds have gone out of your business during the reporting period. This financial statement is the only one of the three that determines the health if your business. It us used to evaluate the ability of a company to pay dividends and meet obligations. The statement of cash flows takes certain aspects of the income statement and the balance sheet. With this statement you can determine where you're spending money and how much you're acquiring. You can see what your net income and accounts receivable are and how those compare to your accounts payable. These numbers show the financial health of your business. If you show a net increase in cash flow you’re business is financially in good health.
Income Statement: Shows all items of income and expense for your business. It's also called a profit and loss statement.
The income statement reflects a specific time frame. For example an income statement for the quarter ending March 31 shows revenue, and expenses for January, February, and March. If the income statement is for the calendar year ending December 31, it would show the info from January 1 to December 31.
The very bottom line of an income statement is income minus expenses. If your income is more than your expenses, you will have a net profit. If your expenses are more than your income, you have a net loss.
Balance Sheet:
Assets = Liabilities + Owner's Equity. However you can also Assets -Liabilities to get owner's equity.
Assets are everything your company has. It includes cash on hand, accounts receivable, and the value of your current inventory along with any equipment or property you own.
Liabilities are what you owe such as your bills, loans, and other costs.
Owner's Equity is your share of the business or how much you've invested.
The balance sheet shows the health of a business from day one to the date ending on the balance sheet. Balance sheets are always dated on the last day of the reporting period. Let's say you've been in business since 2010 and your balance sheet is dated as of December 31 of the current year. The balance sheet will show the results of your operations from 2010 to December 31.
Statement of Cash Flows:
The statement of cash flows shows what fund have come in and what funds have gone out of your business during the reporting period. This financial statement is the only one of the three that determines the health if your business. It us used to evaluate the ability of a company to pay dividends and meet obligations. The statement of cash flows takes certain aspects of the income statement and the balance sheet. With this statement you can determine where you're spending money and how much you're acquiring. You can see what your net income and accounts receivable are and how those compare to your accounts payable. These numbers show the financial health of your business. If you show a net increase in cash flow you’re business is financially in good health.
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ONEZYPHER © LTD-2021: All rights reserved.