06/08/2020 0 Comments
Financial reports and statements are detailed records of the financial activities and position of a business.
There are 4 main statements:
1. Statement of Profit or Loss details the income and expenses of the business which are then used to calculate the money made or lost during a period.
The profit or loss.
This is the most popular statement and contains the information needed to submit to HMRC through self assessment.
2. Statement of Finance Position also known as a Balance Sheet.This reports the assets, liabilities and capital of the business.
If registered with companies house they may require a copy of this statement depending on the size and turnover of your business.
3. Cash Flow Statements detail the cash and cash equivalents coming in and going out of the business.
These are often used to budget for costs during a given period and are usually produced weekly or monthly if required.
4. Statement of changes of Equity or statement of retained earnings.
This report details any changes of equity/capital over a period of time.
This is calculated as assets less liabilities.
Each statement is drawn from a period in time, perhaps a week, month, quarter or year.
Statements can be produced as frequently as required and are often reviewed alongside previous periods to show changes to the business activities.
If using accounting software, reports can be drawn up quickly and easily and shared with others.