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Making a Profit

Accountants are responsible for preparing three primary types of financial statements for a business. The consequences of not having accurate monthly financial statements can be devastating. The income statement reports the profit-making activities of the business and the bottom-line profit or loss for a specified period. The balance sheet reports the financial position of the business at a specific point in time, often the last day of the period and the statement of cash flows reports how much cash was generated from profit what the business did with this money.

Spend the time, effort and money to communicate your financial statements clearly and convincingly. You read an income statement from the top line to the bottom line. Every step of the income statement reports the deduction of an expense. The income statement also reports changes in assets and liabilities as well, so that if there's a revenue increase, it's either because there's been an increase in assets or a decrease in a company's liabilities. If there's been an increase in the expense line, it's because there's been either a decrease in assets or an increase in liabilities.Net worth is also referred to as owners' equity in the business. If your objective is to increase your wealth, make it your goal to increase your net worth, not simply to acquire more assets. They're not exactly interchangeable. Net worth expresses the total of assets less the liabilities. Owners' equity refers to who owns the assets after the liabilities are satisfied. These shifts in assets and liabilities are important to owners and executives of a business because it's their responsibility to manage and control such changes. Making a profit in a business involves several variables, not just increasing the amount of cash that flows through a company, but taking a manage of other assets as well too.