The Basics Of Accounting For Small Businesses

1472 Words Nov 28th, 2014 6 Pages
A major aspect of owning a business is following certain standards set by your state legislature. Today, businesses have the obligation of accurately reporting their sales and finances. It is essential for businesses to file the correct report, tailored to your business, in order to succeed and keep track of your company’s finances. Furthermore, with regulations and laws set in place, it is important to know the standards that are set and to abide by them. A portion of business ethics is being transparent and allowing your reports to truthfully represent the financial position of your business.
According to the article, “The Basics of Accounting for Small Businesses,” a financial report is an analysis of the financial data recorded in the books by a business. There are many types of financial reports, such as a balance sheet, income statement, statement of cash flows, and statement of retained earnings. A balance sheet is a report that presents the balances of the business’ assets, liabilities, and equity at a given time. An income statement demonstrates the revenues and expenses, and shows whether the company resulted with a net income or loss for a given period. A statement of retained earnings exhibits the alterations made to retained earnings for a given period. A statement of cash flows illustrates the inflows and outflows of cash through operating, investing, and financing activities.
As expressed by Garcia, some of the essential reports for restaurants are inventory…
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