The basic understanding of bookkeeping and accounting is vital to the survival of every business. Accounting and bookkeeping produce various reports that come to aid the success of businesses. The effective use and proper embrace of the various accounting reports can see managers make informed decisions about the operations of their firms. Through production of detailed reports accounting helps your business to be understood by the public and its stakeholders. The following is a detailed walk through the basic accounting reports your company should embrace.
The first one is the v vs. the actual report of your business. These are the reports that bring about the comparison between what the management expect from the outcome of the business operations and what actually happens on the ground. The budget vs. actual report is finalized every month and then embrace to help find out how well the operations of the business live up to the expectations.
The next report to look into is the balance sheet. It is through these reports that the liabilities and the assets of a firm are made known to the management and other relevant persons. It gives a highlight about how well your business is doing financially. The management of your business will need this report to help them make informed business decisions. It is through the provisions of this report that the creditworthiness of your firm will be scrutinized.
The next report that is equally important to your business is the income statement. It is through this report that the revenues and the expenses that accrue from the operations of your business are highlighted. The report is majorly known as the profit and account. An income statement provides the only way to keep potential investors on the know about the profitability of your business as well as the possibility of gaining or losing from investing in your business. This report is also helpful in determining how well your services and products do in the market.
Also crucial is the accounts receivable report. Businesses get the chance to categorize their accounts in various groups dependent on the information provided in the accounts receivable report. Having categorized the accounts your business will have the ability to track and manipulate how your cash flows work. This is possible through the efficient management of invoice and collection issues as enabled by the right use of account receivable report.
Finally, there is the cash flow statement. This report aims to give full details of all the cash coming through to and from your company over a particular time. This statement differs from all the others as it only takes care of money activities. This statement will enable you to make decisive steps into promoting the operations of your business.
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