Creating and keeping accounting records is an important part of running a business. For those of you who run small businesses without a professional accountant or bookkeeping Kent firm, you must have an understanding of the documents and reports that are important. Accounting reports are vital documents that provide a detailed insight into the performance of a business. Without experience in accounting or finance however, they can seem complicated. The 3 most important accounting reports to keep are:
- Balance Sheet
A balance sheet used assets, liabilities and equity to show a business’s financial position. In general, the value of the assets of a business should equal the value of liabilities and equity together. If a business wants to get a loan from a bank or investor, it will usually have to provide a balance sheet first.
- Income Statement
An income statement will use revenue, expenses and net income to show the amount of money a business has lost or made over a certain amount of time. For a business to be successful, the revenue should be higher than the expenses which will result in a positive net income.
- Cash Flow Statement
This report reflects the amount of cash that has moved in and out of your business over a certain period of time. A cash flow statement is made up of the cash flow from operations, cash flow from investing and cash flow from finance, which will then be calculated to provide the net cash.