• New Wave Accountants

4 Financial Bookkeeping Reports Essential for Businesses

The years of bringing a shoebox full of statements and receipts to your accountant for filing is long gone. Modern developing companies are taking advantage of the latest tools and equipment to grow their business.


To know their performance, they organise a monthly review meeting with their small business accountants. This helps them learn from their mistakes and use what they've learned to make better business decisions in the future.


With that said, we've outlined the four essential financial statements business owners should review with their accountant at least once a month.


1. Income Statement


Your income statement summarises all of the funds received over a specified period, usually a month, quarter, or year. It shows both operating and non-operating income.


Operating revenue is money earned from normal business activities. For instance, if you own an e-commerce apparel retail shop, your significant operating revenue comes from inventory sales. On the other hand, non-operating revenue is money earned in ways that aren't directly related to your business, including property sales, equipment sales, or investment returns.


2. Balance Sheet


The balance sheet is a document that lists your assets, liabilities, and equity. Assets equal liabilities plus owners equity (accounting equation: Assets = Liabilities + OE).


A balance sheet typically has two columns: one that lists your assets and your liabilities. Both columns should be balanced and indicate the same total profit or loss when the sheet is created. A balance sheet is a financial statement that shows how well your company is doing financially.


3. Cash Flow Statement


As an e-commerce business owner, a cash flow statement is possibly the most crucial document you can have. It shows every expense (e.g., rent, maintenance, and inventory) and every revenue source (e.g., every sale your company makes during a specific period).


It not only shows your company's gross revenue and net profit, but it also represents whether money spent is being drained by wasteful costs or going toward business growth.


4. Inventory Forecast


Inventory forecasting is the process of estimating future sales volumes based on past and projected sales trends. It takes into account all your Stock Keeping Units (SKUs), sales velocity, and seasonality. This enables you to make informed judgments about how much inventory to order at any given time, which products to order, and when to order them.


Inventory management is both an art and science because you want to ensure that you have enough merchandise to meet any unexpected demand while not having too much extra inventory that sits unused in a warehouse.


If you have any trend-related items or have expiration dates, such as food, drinks, or supplements, this becomes much more critical to get correctly.


Get the Best Help for Your Small Business


By regularly creating and reviewing these four accounting financial statements, you can examine how well your company's finances are doing or uncover areas that need improvement.


If you don't have the time or knowledge to understand financial accounts, our bookkeeping services on the Gold Coast can help. We can monitor your performance to give you more assurance and confidence in making short- and long-term financial decisions. Give us a call and let us know what we can do to help you!


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