Owning a business can be a very difficult challenge for the owner isn’t careful and doesn’t maintain a balanced financial account. The purpose of building the balance sheet is to have a snapshot of the business finances at a certain point in time (Zion Bank). If I owned my own business the balance sheet would be the most important area I focused on. Since the balance sheet shows what I own, owe, and what my company is worth, I would ensure that my appointed accountant stays on top of where my money is being spent. This will help me determine where I need to cut back or increase my revenue.
Within the balance sheet there is the statement of revenue and expense. This particular item shows a period of time rather a point in time or one single date (Baker & Baker 2011). It shows how well my company has been in the current year compared to a previous or a future year. This would help my financial department determine my revenue inflow, expenses, and overflow. The last section that would be focused on is the statement of cash flow.
The statement of cash flow helps determine the change in where cash comes in and cash equivalents are turned into cash, which includes cash on hand and cash that is due to come in (Zion Bank). For my company the statement of cash flow will help summarize the cash that has come in for that year and what has been lost due to depreciation of equipment and funds.
Baker, J. J. & Baker, R. W. (2011). Health Care Finance, Basic Tools for Nonfinancial Managers (3rd ed.). Sudbury, MA: Jones & Bartlett Publishers. ISBN: 9780763778941
Zion Bank (2012). How to Create Prepare a... [continues]
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