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Accountants in Preston

Accounting Reports

There are three main accounting reports.  Most other reports supply further detail on these “Big Three”.

Firstly, here are some questions which a business owner will be asking:

Where do you stand today?

This is all about assets and liabilities, how much is in the bank, how much do people owe you? How much do you owe?

How have you done over a period of time?

This is all about sales and expenses, and calculating profit.  A sale is recorded on the day of the sale, not the day the money comes in.

Can you explain where the cash has come from and where it has gone?

This is all about cash flow.  You might have sold something, so it’s a sale, but did you get the money?  Or money might go out this month from something you bought two months ago, so that’s money out this month, but an expense two months ago, not this month.

From these three questions you can see that different answers are required.  

The first question requires a fixed position, the other two require a report which covers a period of time.

So how does this translate into Accounting reports?

Balance Sheet, Profit & Loss Account, Cash Flow - what are these?


Profit and Loss Account

The summary of the 'Ins and Outs', based on the dates of the bills, over a period of time.

Cash Flow

This report is based on the ‘Ins and Outs’ of the money itself.

Balance Sheet

shows what is left after the 'Ins and Outs' - ie. a snapshot of the balances.


Please click on the above links for more detail.