Almost all entrepreneurs don’t need an expert to explain to them the importance of accounts. These businessmen understand the necessity of keeping proper, authentic and up-to-date records of their finances. It gives them a clear idea of bottom-line profits they are earning in a particular period. This indicates the level of success their organizations achieve in conducting their activities in the market. It also provides them with the information they need to make important decisions. The data enables these proprietors to determine how much they have to pay in the form of taxes.
Arnon Dror official What accounting reports should entrepreneurs should scrutinize thoroughly?
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He points out that they should pay special attention to the following essential three accounting reports:
- Balance Sheet
This document gives entrepreneurs a snapshot of the financial health of their concern on a particular date. It contains a list of all the assets they possess on this day. These may include industrial real estate, intangible property, machinery, equipment, bank balances, cash, and accounts receivable. At the same time, it also contains a summary of the liabilities they owe. These could include their own capital, bank loans, credit card dues, overdrafts, and accounts payable. The total sum of what these businessmen have and owe should be equal.
- Income statement
Experts in many countries also refer to it as the Profits & Loss Statement. This accounting report indicates how successful entrepreneurs are to conduct their commercial activities. The document tells them how much profits they earn during a particular period like a year or a month. They get a very clear idea of where their money comes from and how they spend it. They can make the necessary adjustments to their market operation to obtain the best results.
- Cashflow statement
The Income Statement gives entrepreneurs a picture of how profits they are earning in a certain period. However, it doesn’t give them an indication of how they are utilizing the money coming into their concerns. Such businessmen need to know their sources from where they are getting such funds. They also need to understand the areas of their organization they are spending it on. This is the reason why these proprietors need to prepare a cash flow statement.
Arnon Dror says the above three important accounting reports give entrepreneurs a lot of information. They get to know how well they are managing their businesses in the market. They can then identify the areas where they need to improve. Without this knowledge, they can’t make decisive decisions. He also says that as a business owner you should never ignore your personal life. The Arnon Dror wedding and family tips also help entrepreneurs to balance work and home to lead happy and fulfilled lives with success!