Universal Bookkeeping Reports: Begin with the Balance Sheet

As a business owner you will see your Balance Sheet, Profit & Loss and Cash Flow Statement regularly. How are these reports connected?

Balance Sheet: This will separate what you own (assets) from what you owe (liabilities). The difference between them is your equity or capital. One element of your equity is the current year earnings also known as your net profit.

This video explains.

Transcript: This is Annabella from Numeri. Here is a 2 minute guide to understanding your Balance Sheet. This report is fundamental for you to know how your business is operating because it separates what you own from what you owe. To access the report, it should list as a default favourite from the drop-down menu of your Reports bar however you can also access it as the first option in the Financial Section. Once you choose the time periods you wish to compare your data, your assets or what you own will be listed first and they are listed in order of what is most easily converted to cash so the money in your bank account would be first. Your accounts receivable is commonly second. These are invoices you have sent to clients and you're expecting payment shortly. When your clients pay their invoices this figure will decrease and this figure, your cash, will increase. Your liabilities are what you owe and in like manner the accounts payable refers to bills you have entered that supplies are expecting payment shortly and when you pay your bills to your suppliers, this figure will decrease and of course your cash will also decrease. When you subtract your total liabilities from your total assets the result is your equity and a neat feature of the current year earnings is that this figure is also the result of your Profit and Loss statement: your expenses subtracted from your revenue here we see the same figure. This is a nice example of how two essential reports work together to balance. Would you like more information? Please send me a message so that we can get in touch.