There are two main subjects in the report:
The Profit and Loss statement tells about the earnings and spendings of the company during the year. This means how much income has the company had from the daily running of activities and how much has the company spent on the same activities.
This part of the report tells whether the activities have been running as a profitable business in the period or not. It is called the Profit and Loss Statement.
The other main statement in the report is the Balance Statement which shows the actual value of the company as such. This means how much money is present in the company in total when the value of buildings, tools, stock, money in the bank account and in the cash box etc. is added.
It also shows how much the company owes to others. A company normally owes money to suppliers, the bank and to the owner of the company.
The statement reports are generated by your PC bookkeeping programme or your accountant´s programme. The statement is generated from the vouchers entered in the bookkeeping programme.
If you have entered all your vouchers correctly during the year, the statements will give a true financial picture of your business.
To be able to read the statement you must know the elements in it.
- Go to next business issue: The Profit and Loss Statement
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