When you keep your company books day after day, all those invoices, checks, and other transactions blur together. But hidden within that maelstrom of figures is important information for you, your accountant, your investors—and the IRS. Consolidated and presented in the right ways, your books can tell you a lot about what your company does right, does wrong, could do better, and of course must pay to the Internal Revenue Service.
Over the years, the Financial Accounting Standards Board (FASB) has nurtured a standard of accounting known as GAAP (Generally Accepted Accounting Principles), which includes a triumvirate of financial statements that together paint a portrait of company performance: the income statement (also known as the Profit & Loss report), the balance sheet, and the statement of cash flows.
Generating financial statements in QuickBooks is easy—so easy, in fact, that you’re likely to produce fodder for your paper shredder unless you understand what financial statements tell you, and you can spot suspect numbers. If you’re new to business, get started by reading about what the three financial statements do. If you’re already an expert, you can jump down to the section on generating these reports in QuickBooks (Section 14.1.2).
These special financial reports are a must as you close out a year on your company books. You’ll learn how financial statements fit into your year-end procedures in Chapter 15. If you’re a business ...