Financials, aka Financial Statements (go to SEC.gov Financial Statements to learn more), in the world of big business include the following:
The 3 Primary Financial Statements
- Profit & Loss Statement, P&L, or Income Statement – reports a business’ sales, expenses and profit/loss for a period of time, most commonly a month, quarter or year
- Balance Sheet – reports a business’ assets, liabilities and owners equity at a specific date, such as December 31, 2024
- Statement of Cash Flows – reports the “Sources” and “Uses” of a business’ cash for a certain period such as a month or year, showing a business’ cash position at the beginning and end of the period and the net change in cash resulting from the sources and uses of cash
The 4th lesser well known financial statement is the Statement of Owners Equity, which reports the transactions which increase owners equity (i.e. cash you invest in the business and business profits earned) and decreases to owners equity (i.e. cash/dividends you take from the business, business losses if any) for a period of time most commonly a month, quarter or year.
As a CPA with a 40+ year career in corporate accounting and finance (see About Us), we can prepare and provide all or any of these financial statements which would be helpful to understanding your business, with this caveat.
To prepare your company’s Balance Sheet, Statement of Cash Flows, and Statement of Owners Equity, or any of these, we must maintain for your business a full accounting general ledger system such as QuickBooks, or have access to your full accounting system. Setting up and maintaining a full accounting system is a big step even with QuickBooks vs. relatively simple Checkbook Bookkeeping (see Bookkeeping page).
There are no hard rules when you would need a full accounting system such as QuickBooks, but if your business sends invoices/statements to customers for services provided, purchases and keeps an inventory of products for sale, and/or your business requires a significant investment in capital assets such as equipment or office furnishings – these point to the need for a full accounting system.