Small business accountants in Melbourne explain the difference between the four financial statementsIf you own a small business, it may be difficult to get your head around the four main financial statements. Although they link to each other and share some similar properties, they are used for different purposes and contain important elements that our small business accountants in Melbourne want you to understand.
Balance Sheet
This report provides a brief summary of a business’s economic resources, liabilities and equity items. By reviewing a balance sheet, investors are able to judge the corporate liquidity and solvency of the company.
Income Statement
Our business accountants in Melbourne often refer to this statement as a statement of profit and loss. The financial data included consists of revenue, expenses and net income or loss. Attention is payed towards the income statement to understand ways to increase profitability.
Statement of Cash Flows
A negative statement of cash flows is described by our small business accountants in Southbank as an insight to company dysfunction. Cash flow from operating, investing and financing are the three sections making up a liquidity report and allow managers to see signs of poor money management.
Equity Statement
An equity statement shows changes in the capital balance of a business. The amount of owners’ equity is increased by the contributions of the owner and income. It is then decreased by losses and other draws from stakeholders, including dividends.
To find out more information about financial statements, please contact our small business accountants in Melbourne today. |
