Financial statements with current accounting data should be a priority for every business, but some business owners neglect to keep up with this essential element of operating a business, which puts them at a major disadvantage.

Accounting data enables business owners to evaluate the company’s financials and use the information for strategic accounting decisions.

Monthly Bookkeeping

If you are current with your bookkeeping each month, producing a financial statement, or a formal record of the financial activities of a business, shouldn’t be a problem. Owners and managers can use financial statements to make important business decisions.

This is especially important to businesses that offer promotions, coupons and daily deals. Discount campaigns need to be tracked closely so the business owner can see what is working and what is not and make decisions on when to continue or end a promotion.

Four Key Components to a Financial Statement

The statement should include all of the relevant accounting data in a structured and easy-to-understand form. They often include management discussion and analysis.

1. Statement of Financial Position

Balance sheet, assets, liabilities and ownership equity at a given point in time.

2. Statement of Comprehensive Income

Profit and loss statement, or PandL, income, expenses and profits over a period of time.

3. Statement of Changes in Equity

Explains the changes of the company’s equity throughout the reporting period.

4. Statement of Cash Flows

Reports on a company’s cash flow activities including operating, investing and financing activities.

Financial Statements a Priority

Financial statements can be a disadvantage if business owners disregard them. In point of fact, business owners should be using financial statements for all of their strategic accounting decisions.