{"id":525,"date":"2021-01-11T10:22:55","date_gmt":"2021-01-11T10:22:55","guid":{"rendered":"https:\/\/www.akgvg.com\/blog\/?p=525"},"modified":"2021-01-11T10:59:14","modified_gmt":"2021-01-11T10:59:14","slug":"the-different-types-of-financial-reports-a-business-owner-must-know-about","status":"publish","type":"post","link":"https:\/\/www.akgvg.com\/blog\/the-different-types-of-financial-reports-a-business-owner-must-know-about\/","title":{"rendered":"Different Types Of Financial Reports A Business Owner Must Know About"},"content":{"rendered":"\n

A business owner should keep financial reports at disposal which enables to analyze the business operations for better future functioning and make more informed decisions. <\/p>\n\n\n\n

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Given below are the five most important types of financial reports which the owner should be reviewing on time to time to gain a better understanding of the company\u2019s financial performance.<\/p>\n\n\n\n

1. Balance Sheet<\/strong><\/p>\n\n\n\n

This is a financial statement which summarizes a company\u2019s total assets (current, non-current and intangible assets), liabilities (financial obligations), and shareholders\u2019 equity (investments and retained earnings) at a specific point in time. The ideal preparation time of balance sheet is at the end of an accounting period. A balance sheet is the best possible reflection of a company\u2019s financial position, including the economic resources the company owns, owes, and the sources of financing for those resources. The Balance Sheet is also a handful resource\/report in making informed financial accounting decisions. The lenders too can benefit from a balance sheet as it can be used by them to determine a company\u2019s creditworthiness.<\/p>\n\n\n\n

2. Income Statement<\/strong><\/p>\n\n\n\n

This statement is also known as the Profit and Loss Statement (P&L), Statement of Operations, or Statement of Income. The income statement specifically summarizes the total revenues and expenses incurred by the business, showing the profitability (net income or net loss) over a specified period of time, usually a month, quarter or year. The Income Statement is used by internal stakeholders (such as the management team and board of directors) as well as external stakeholders (such as investors and creditors) for the purpose of evaluating profitability and helps assess the level of risk for an investor or creditor. The company can be called a viable and valuable only if the revenues exceed expenses.<\/p>\n\n\n\n

3. Cash Flow Statement<\/strong><\/p>\n\n\n\n

The Cash Flow Statement is a summary of all the cash inflows and cash outflows of a business over a period of time. The statement differs from the Balance and Income Statement because it only takes into account cash transactions. In other words, non-cash activity which do not involve any cash inflows or outflows like sales or purchases on credit, depreciation are not taken into account. The three major sections in which the Cash Flow Statement is presented are operating, financing and investing activities. Cash flow statement has the best use in estimating the future cash flow which will assist with budgeting and decision making. The Cash Flow Statement, Balance Sheet and Income Statement is the most inclusive standard financial statement package. <\/p>\n\n\n\n

4. Accounts Receivable Aging Report<\/strong><\/p>\n\n\n\n

The Accounts Receivable (A\/R) Aging Report puts the outstanding accounts into category receivable into groups based on the due date of the invoice, typically current. A poorly maintained accounts receivable especially for small and mid-size businesses is a cause of worry. The A\/R aging report review ensures that the companies proactively manage the receivable collections process immediately upon invoicing and create more accountability for the person responsible for collections.<\/p>\n\n\n\n

5. Budget vs Actual<\/strong><\/p>\n\n\n\n

This report, as the name clearly suggests is a comparison of actual results, primarily from the Income Statement, against the budgeted amounts that were projected at the beginning of the period. This report comes as a helpful piece of information to the reader who can assess how closely a company\u2019s spending and revenue generation meets the financial forecasting projections included in the budget. The budget vs actual report is also beneficial in identifying the areas that were over and under budget, indicating the ability to hire additional employees. They also bring attention to a gross profit margin which is not in accordance with the financial reporting expectations.<\/p>\n\n\n\n

This content is meant for information only and should not be considered as an advice or legal  opinion, or otherwise. <\/strong>AKGVG & Associates <\/strong><\/a>does not intend to advertise its services through this.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

A business owner should keep financial reports at disposal which enables to analyze the business operations for better future functioning and make more informed decisions. Given below are the five most important types of financial reports which the owner should be reviewing on time to time to gain a better understanding of the company\u2019s financial…<\/p>\n","protected":false},"author":1,"featured_media":1174,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[229],"tags":[273,272,274],"class_list":["post-525","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-reporting","tag-balance-sheet","tag-financial-reports","tag-income-statement"],"_links":{"self":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/525","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/comments?post=525"}],"version-history":[{"count":2,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/525\/revisions"}],"predecessor-version":[{"id":1175,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/525\/revisions\/1175"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media\/1174"}],"wp:attachment":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media?parent=525"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/categories?post=525"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/tags?post=525"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}