Financial Statements For the Small Business Owner
Now come on and admit it; you have financial statements but do you really take the time to review them? Maybe the first step is to review the basics…
Method of Accounting
First you have to understand the difference between the accrual basis vs. the cash basis of accounting. Don’t run… it’s okay. I’ll explain it to you. If you only record transactions when you pay or receive cash, then you are on the cash basis. If you record transactions to accounts receivables, accounts payables and prepaid expenses then you are on the accrual method. Whew, that wasn’t so bad!
Income Statement
Your income statement is your report card for the current year. You need to look at your grades all season. You can’t expect good grades if you ignore them until finals. Sure you might get by but we want you to get into an ivy league school!
The biggest fear most business owners have is that they have a loss. This means that expenses are more than income. Watching this information gives you a chance to change your strategy and come up with a new plan before you go out of business. Maybe you need to raise your prices, cut Joe’s salary, or come up with a new marketing plan.
Balance Sheet
Your balance sheet is your statement of financial position. It tells you what you own and what you owe. It also lets you know if you have enough current assets to meet current obligations. If you have $20,000 in the bank and owe $30,000 next month in expenses you need to have an idea how you are going to cover the $10,000 difference.
Statement of Cash Flow
Does anyone even prepare this if they aren’t being audited or getting a loan? Well you should. This oft neglected statement reminds me of a movie line-Show me the money! OK, it was better when Tom Cruise said it.
The statement of cash flow basically converts your income statement from the accrual method to the cash method. It will show you where your cash was used. Even though you have income of $100,000 for the period you might have forgotten that you had invested $150,000 in new equipment and remind you of the dividends you paid yourself.
Of course, most importantly, financial statements need to be done timely and correctly to be relevant. So at the end of this month, go in to your accountant’s office and ask if the financials are ready to be reviewed and say-Show me the money!
Tags: accrual method, business owners, financial statements, income statement
Hello,
phentermine drug
During the first few weeks, the client must establish a weight loss program wherein diet and exercise is included which can be continued after the medication is no longer used to keep losing weight and not gain back the old pounds.
phentermine 37.5
It works by helping to release chemicals in the brain.
http://www.fourseasonsindiatour.com/ - buy phentermine online
Those with history of drug abuse have higher chances of developing a dependence on appetite suppressants.
nutone medicine cabinet mirror
fixtinhot cheap xanax No hidden fees! Generic Name: Alprazolam Xanax is prescription drug for the treatment of anxiety disorders, panic disorders and depression-related anxiety. generic alprazolam Dizziness, euphoria, suicidal ideation, confusion, hypotension, stress, sexual dysfunction, muscle rigidity and tremor, ataxia, and memory impairment are other known side effects. http://www.cebucityphilippines.net/ - xanax no prescription However, the rapid removal has complexities as well.
alternative medicine cranial fixtinhot
vardenafil online
See the list of reliable online pharmacies selling low cost Levitra (Vardenafil).
levitra online
There are some questions which you need to answer before taking Levitra.
http://www.breakthroughmarketinggroup.com/ - cheap levitra online
Here are the reasons why Levitra is not for you: - Taking Levitra while on alpha-blockers can cause your blood pressure to rapidly drop to an unsafe stage which can make you feel dizzy or faint.