Income Statement
An income statement or (profit/loss statement) adds up an itemized list of all your revenues and subtracts an itemized list of all your expenses to come up with a profit or loss for the period. An income statement is the most immediate reflection of your business’s performance. It can quickly identify trends in your business income as well as spotlight any expenses that are out of line.
Balance Sheet
The balance sheet is a statement of the assets, liabilities, and capital of your business. It is a snapshot of your business’ financial condition, and allows you to project the financial strength of your business. An accurate and up-to-date balance sheet allows you to analyze how your business is trending and determine if you need to take steps to increase cash flow or stretch out payables.
General Ledger
The general ledger is the main accounting record of your company. Every transaction that moves through your company -debit and credit-is recorded in the general ledger. The double-entry system means that a discrepancy is quickly identified.
When you approach potential lenders such as banks, investors and vendors, they will want to see your balance sheet and income statement in order to determine how much credit to extend to you. Potential partners or purchasers will want to see a clean, accurate, up-to-date set of books.
