Unlock the power of financial statements!
As a business owner, it is essential to grasp their importance. These statements offer a quick overview of your business’s financial health, showcasing key figures like revenue, expenses, and profitability. With this knowledge, you can make informed decisions to drive success.
Balance Sheet
The balance sheet provides a snapshot of your business’s financial position at a specific point in time. It includes assets, liabilities, and equity. Assets are resources owned by your business, such as cash, inventory, and equipment. Liabilities are debts owed by your business, such as loans or accounts payable.
Equity represents the residual interest in the assets of your business after liabilities are deducted.
The balance sheet shows the total assets of your business equal to the total of liabilities and equity.
It’s important to note that the balance sheet is a static document, meaning it represents a single moment in time and does not reflect changes in financial position over time.
Profit and Loss
The profit and loss statement, also known as the income statement, provides a summary of your business’s revenue and expenses over a specific period of time. It shows your business’s revenue, cost of goods sold, gross profit, operating expenses, and net profit.
Revenue represents the total amount of money earned by your business during the period, while cost of goods sold represents the cost of producing the goods sold. Gross profit is the difference between revenue and cost of goods sold.
Operating expenses include expenses related to running your business, such as rent, salaries, and marketing. Net profit is the final amount left after all expenses are deducted from revenue.
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– Team BKSP
