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Three Financial Statements That Every Business Owner Needs To Understand

Tuesday, December 19, 2023

Financial statements are they keys to assessing your business’s well-being. They provide a snapshot of a business’s financial position and performance. Each one provides valuable information, so understanding these statements is essential for any business owner who wants to make informed decisions to drive success.

What Are Financial Statements?

Financial statements summarize a business’s financial performance over a specific reporting period, such as a month, a quarter, or a year. These statements include three direct reports: the income statement, the balance sheet, and the cash flow statement.

  • Balance Sheet - The balance sheet expresses the financial position of a business. It shows three things about a business’s financial health: its assets, liabilities, and shareholder equity (or capital). When combined, these three elements make up the worth of the business for the reporting period.
  • Income Statement - Also called the Profit and Loss (or P&L) statement, the income statement summarizes a business’s profitability during the reporting period. It details revenue and expenses, showing what it costs to deliver your products and services and keep the business running. Use this statement to compare how revenues increase or decrease over multiple periods to determine trends.
  • Cash Flow Statement - A cash flow statement measures how cash moves through a business to keep operations running, pay employees, pay bills, and invest in opportunities. Cash flow statements enable business owners and partners to understand how the business runs: if there’s sense, process, and predictability in the operations, and if the business is on solid financial footing.

Investors, business owners, and managers need to understand their financial data to drive the business successfully. Unsure of where you stand financially? We’d love to help! Schedule a call.

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About J&S Accounting

J&S Accounting offers full-service bookkeeping, payroll, and consulting services. Our team understands that well-organized financial records help your business run more efficiently. We are a woman and minority-owned accounting practice improving the financial management of small businesses and nonprofits in Savannah, GA and nationwide.

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"...Janel has patiently worked with me to get my books organized exactly how I need to see them..."

We could not be happier with the services J&S Accounting provides our company. Janel and her team seamlessly migrated all of our companies financials to QuickBooks without any disruption to our day to day operations and they continue to support us with our bookkeeping and payroll needs. Janel has been an absolute pleasure to work with and I highly recommend them to anyone looking for help with business accounting and QuickBooks!

"Janel and her team seamlessly migrated all of our companies financials to QuickBooks..."

Janel has been a lifesaver! My husband and I have owned our small business since 2016 and I can honestly say I have never felt more confident in my books since I started working with J&S. We have multiple locations, channels of revenue and POS systems and Janel has patiently worked with me to get my books organized exactly how I need to see them, which was no easy feat! Businesses function on well built systems and our bookkeeping system needed a lot of help. Janel worked with me to rebuild, fine tune, and is assisting me in maintaining our bookkeeping system and I am forever grateful!

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Janel has helped us navigate our bookkeeping and tax prep for several years now, and we'd be lost without her! We highly recommend her to anyone who needs help with bookkeeping!

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Disclaimer

This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business from a professional accountant. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. J&S Accounting does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. J&S Accounting does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.

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Disclaimer

This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business from a professional accountant. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. J&S Accounting does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. J&S Accounting does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.