Business owners engage in multiple financial transactions and all of these transactions are journalized and summarized into several statements known as accounting reports. However, a lot of business owners are not familiar with the important accounting reports and how this accounting helps them grow their business.

On account of this, we consulted Finsmart Accounting to share the 4 most important accounting reports for businesses. Let’s first understand what are accounting reports.

What are accounting reports?

Accounting reports are periodic statements that present the financial status of a company at a certain point in time, or over a stated time period. Now, let us discover some important as well as simple accounting reports.

Below are some simple accounting reports to help business owners:

Aged accounts receivables (A/R): Aged accounts receivables (A/R) is a periodic report that classifies a small business’ accounts receivable to the length of time an invoice has been outstanding. In other words, it will help you determine how much each customer owes you and whether the debt is current or overdue.

With the help of an A/R report, you will get an accurate idea of how much cash you need to collect in the near future.

Aged accounts payables (A/P): This report will outline the due dates of the bills and invoices a small business needs to pay. It lets you see how much you owe each of your vendors and when it is due. Aged accounts payable (A/P) will help small businesses observe cash flow needs and foresee cash shortages that should be taken care of immediately.

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Cash flow statement: A cash flow statement provides small business aggregate data with reference to cash inflows from its ongoing operations and external investment sources. It holds all cash outflows that pay for business activities and investments over a certain period.

Simple Profit & Loss Account: A profit and Loss Statement is the easiest way to figure out whether your business is making progress or experiencing a downward trend. Prepared on a monthly, quarterly, or yearly basis, its key components are Revenue, Cost of Goods Sold, Expenses, Gross Profit, and Net profit or Loss. 

Most important accounting reports: endnotes

These are the 4 most important accounting reports for businesses. Still, got questions to ask? Send them to [email protected] and get them answered by top accounting experts. 

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