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Now we have a brief overview of financial statements, we are left with the task of knowing how to categorize transactions so they appear in the right financial statement. When you categorize transactions, they are grouped into 2 main financial statements or reports namely: The Balance Sheet The Profit & Loss Statement   Previously, we talked of the elements of the financial statements. Now we will turn our attention to what

The statement of cash flow In the previous lesson, we discussed the balance sheet and income statement. Now, we turn out attention to the statement of cash flow. The cash flow statement is interested in cash received and spent in business. It does not care about cousin Lia who used your services and promised to pay you next month when she gets paid. Cash is the lifeblood of any business.

In the last post, I discussed the elements of the financial statement. In this post I expand on how accounts flow through the elements of the financial statement. The very fundamental of any accounting transaction is: assets has to equal liabilities and equity as shown below: Assets = Liabilities + Equity Assets, liabilities and equity are the three main elements of the financial statement and every transaction flows through one of these

In my previous post, I talked about understanding the financial statements and the 3 main financial statements you need to understand your business namely the: Profit and loss statement The balance sheet statement Statement of cash flow These 3 financial statements answer the following questions: How much profits was generated by the business over a given time – profit and loss statement What is the accumulated wealth of the business at any point

There are three statements you need to understand to make sense of your business namely: the balance sheet statement, the income statement and the cash flow statement. As a business owner, you need to keep track of cash, assets, liabilities, operating income and expenses, other income and other expenses. Thereby, the need for these three statements. Sometimes people jump into business without having clear goals or even know why they