In General

For many startup companies, the checking account is the ultimate financial statement.  How much is there and is it enough for the next day, week, or month.  Once your business gets past the critical stage, you will benefit from generating a balance sheet and income statement, on a timely basis, using the accrual method of accounting. 

The balance sheet captures the financial position of a company at a certain point in time.  The income statement measures business activity over time, usually monthly, quarterly, and annually. Many companies strive to generate their financial statements no later than 14 days after the closing period.   This allows you to discover any discrepancies that may exist and alerts management in a timely basis to change course or make corrections to mitigate potential losses.  The timely preparation of financial statements is a great control feature too.  Comparing actual results to budgeted amounts and prior periods can offer insight and accountability to management and owners.

Financial statements serve many stakeholders.  Owners use financial statements to assess management’s stewardship.  Management uses financial statements to measure the results of their plans and strategies.  Lenders and vendors use financial statements to assess the risk of their customers and borrowers.  Supplementary schedules can be generated from your financial statements and be shared with certain employees to provide feedback on achieving profitability or efficiency goals.  Accurate and reliable financial statements provide potential buyers some level of comfort in assessing the value of your business.

As you can see, your financial statements serve many users and truly are an important component of managing your business and related value.

Your Financial Statements, More than a Number!

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