There are three reports that make up the cornerstone of a company’s financial statements. They are the Balance Sheet, Income Statement and Cash Flow Statement.
The Balance Sheet is a snapshot of a company at a precise moment in time, while the Income Statement summarizes the company’s sales and expenses over a period of time, (monthly, quarterly or yearly). Like the Income Statement, the Cash Flow Statement is a report on a company’s activities over a period of time; however its purpose is to show how much cash comes in and goes out of the business. On the surface the Cash Flow Statement might sound a lot like the Income Statement but, as you will see, there is a big difference between the two.
So, as you might have guessed, the next series of financial blogs are going to dig deeper into these essential three statements that every small business owner must understand in order to effectively manage his or her company.
Tags: balance, Balance Sheet, business, business finances, Cash Flow, Financial Statements, Income Statements, small business, Statement of Cash Flow