The Accounting Cycle

What is a Profit Loss Statement & Balance Sheet? Profit Loss Statements & Balance Sheets are financial statements that tell you the small business owner where your money is coming from and going to. Without this information a small business owner is walking blind. A small business owner may think they are making more money because their volume is higher but they may miss that they are spending more to make it.
A properly formed Profit Loss Statement can tell you if you are spending to much in one particular expense like payroll, supplies or utilities. Before financial statements can be produced data needs to be entered into the financial program like QuickBooks or Quicken. Daily transactions like monies received; monies spent; accounts receivables (monies owed to you); and accounts payables (monies you owe to other vendors).