I can’t tell you how many people I’ve talked to who throw their bank statements away. Okay, this hurts my little accounting heart. Especially since the reason they throw them away is because they are frustrated because they don’t understand them. Well, I am going to fix that. Everybody should understand their money!
So, I’m going to do a series on Financial Statements and Accounting and Bookkeeping. Because you guys know my mantra: If you don’t know where your money is, then YOU DON’T KNOW WHERE YOUR MONEY IS!
Here we go:
What are Financial Statements?
Financial statements are simply reports that organize your money. That’s it. That’s all they are. Don’t let them scare you.
Two reports make up your Financial Statements: the Balance Sheet and the Income Statement (sometimes called the Profit and Loss Statement).
Assets, liabilities, revenue, expenses: all of them are just ways to put your money into “buckets” so you know how much you have of what kind of “thing”.
That’s really it. That’s all Financial Statements are. Two reports - The Balance Sheet and the Income Statement – that organize your money. (Okay, there’s this third report called the Statement of Cash Flows, but that report is so complicated sometimes *I* have trouble with it. So we’re going to skip that one for now.)
My goal is to help you understand what the Financial Statements are, how to read them, and how to make sure you know where your money came from, and where it’s going. Because if you don’t know that, you really can’t be successful in business (or in life, really, but that sounds preachy. Which I’m not. ☺)
So, I’m going to break it down into little bitty pieces and when I’m done, if I do this right, you’re going to understand financial statements. As a matter of fact, you are going to be able to ROCK the Financial Statement!
Because this stuff isn’t rocket science, it’s just that it’s not taught in schools. For some reason, we all get out in the workforce, and we’re just supposed to “know” this stuff. And, the fact that we don’t know it makes us feel dumb. Which is never productive.
You probably don’t know this for the same reason I didn’t: no one ever taught me. That is, until I went to business school. So, I’m going to share and we’re going to figure it out together and when it’s over, pinky swear, you really will understand financial statements and accounting and bookkeeping.
Trust me, if we can juggle a household, a spouse, kids, a career and a new business, this stuff is going to be a chocolate-y piece of fudge-y cake goodness!
And now, a word from our Sponsor (okay, me.):
As I said, my goal is to help people understand accounting because I truly believe that unless you do, you ultimately Can Not run a successful business. So, I’m breaking things down into very, very small bites and I hope no one feels like I’m talking down to them as that is certainly NOT my intention! In the past fifteen years I’ve helped dozens of small business owners get their financials in order, and over and over again I’ve seen someone taken advantage of because they hire someone to do the bookkeeping, but they themselves don’t know enough to be sure the person is: A: Doing it correctly, and B: Doing it at all! I truly, sincerely, DON’T want this to happen to you. So, if I break something down so far that you’re bored, I hope you’ll come back in a couple of weeks when this series is over, or browse through the other articles here. Or, drop me a line and tell me what you’d like me to go over. I love to hear from people!
Next up: The Balance Sheet and Profit and Loss Statements.
You’re gonna love it!
