- June 6, 2016
- Posted by: Harpreet
- Category: Tax Tips
What is a financial statement and why is it important?
One common question I am asked by business owners is, do I need financial statements?
Lets first understand what financial statements are. A company’s financial statements provide various financial information that investors and creditors use to evaluate a company’s financial performance.
There are two primary statements incorporated in the financial statements.
Income Statement – shows the revenues earned and related expenses covering a certain period of time.
Balance Sheet – designed to show you a picture of your assets and liabilities (debts) at a point in time.
A basic financial statement is accompanied by a Notice to Reader report, which indicates that the CPA, CA has complied the statements based on information provided by Management. A Notice to Reader does not provide any assurance on the accuracy of the numbers. However, banks and lenders often use Notice to Readers as a starting point in determining lending opportunities and whether they should be lending your business money.
Financial statements are also useful for business owners in summarizing the yearly affairs of the business and providing a financial picture of the Company. As your business grows, you need to ensure your financial management system grows with you. Call us today for more details.