Your Financial Reports

Excerpt Page 11

One goal of bookkeeping is to get meaningful reports. The three main traditional accounting reports are the Profit & Loss Report, Balance Sheet, and Cash Flow Report. There are many differences between corporate and private accounting. In corporate accounting, the cash flow report is essential, but most private business people use their bank balance as a cash flow report. Besides, if you have an accurate Profit and Loss Report, you're doing better than most. Most business people cannot produce a P&L Report worth the beans they so lovingly attribute to "bean counters". If you even attempt to produce a Balance Sheet, pat yourself heartily on the back. If you manage to get your Balance Sheet to contain accurate numbers, you're way ahead of the competition.

How can I make such a sweeping statement? As a business analyst, I've been privileged to see all kinds of private accounting-accounting done by salaried bookkeepers, freelance bookkeepers, software consultants, CPAs, their assistants, and by the business owners themselves. The bottom line is this: Far too many business people have very little knowledge as to how much they're making and spending, and even less knowledge as to how much their business is worth. This limited knowledge is limiting them.

Reports give you numbers. If you work with your numerical data, you'll have numbers on a silver platter-a silver platter from which you can offer the fruits of your labor to your tax and financial advisors. They can help you generate additional profitability. Profitability can be used to purchase whatever you want, including sterling silver platters. Don't you just love it?