Annual Financial Statements

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What are financial statements? They are a summary of the monetary information flowing through a business. Financial statements are a collection of individual financial summaries typically balance sheet, income statement, cash flow information and explanatory notes. The balance sheet is a snapshot of the business at a point in time (typically the year end) showing the value of the assets, the liabilities and the owners equity. The income statement summarizes the trading activities (revenue) and the categorised expenses of the business over a period of time (typically a year) The cash flow statement ties the time based cash activity on the income statement to the year on year movement reflected on the balance sheet. The notes attempt to explain the accounting principles used, the methods used to account for things as well as explanations for changes in numbers. These are the essential components of financial statements. Not every business requires a full set of financial statements but if you are planning on: • selling your business • borrowing money • looking for a business partner • making an important business decision • better understanding your business performance • getting your cash flow under control • better understanding your wealth building ability • knowing what’s behind your business numbers You should consider at least having a balance sheet and income statement

or summary of business activity (required by CRA for sole proprietors) prepared by your accountant. The financial statements provide a permanent record of your business activities over time. This easily accessible information  makes for easier, less time consuming and more effective business decision making. Notice to reader financial statements Whenever possible we highly recommend that you have basic “Notice to Reader” financial statements prepared on an annual basis by your accountant. Our notice to reader financial statements consist of a balance sheet and an income statement. The cost is minimal but it adds great value to your business. Our small business accounting package includes the cost of producing “Notice to Reader” financial statements