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Understanding a Balance Sheet

Why do we need to understand a Balance Sheet?

A Balance Sheet (also known as Statement of Financial Position) is one of the three primary financial statements (along with the income statement and statement of cash flows) showing the company’s financial condition at a specific point in time. Unlike the income statement which shows the performance of a company over a period of time, the Balance Sheet shows the business’s current financial position.

A Balance Sheet enables you to analyze and evaluate the financial health of your business and share this information with others, such as your current or potential investors, lenders, and other persons outside the business who need to stay informed about the business’s financial affairs.

Business managers and anyone thinking of becoming an entrepreneur and starting a business should know how to understand financial statements and the accounting methods used to prepare them. With

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Posted in business, PayTraq U, Financial statements

Profit and Loss Statement

Financial statements contain substantial information about your company's operating results and financial position. The profit and loss statement (P&L) and the balance sheet are the two basic financial reports that give you this information. Taking the time to better understand these reports will give you more control and a clearer picture of your business and how it’s performing. If you were putting your P&Ls away without reading through them, you are not on your own. However, getting a grasp on your P&L is crucial to knowing how to operate your business efficiently.

Almost all entrepreneurs start businesses because they are excited about the main work of the business - which probably isn’t accounting. Therefore most entrepreneurs aren’t fully at ease interpreting the regular monthly financial statements they receive.

There are countless entrepreneurs who never view their profit and loss statements because

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Posted in business, PayTraq U, Financial statements