Financial Statements and Analysis

Financial statements are to an entrepreneur as gauges on the dashboard are to a driver. Accounting is about recording and organizing important financial data into categories that provide useful information. Accounting is also the common language of business. While a business is responsible for preparing the financial statements, sometimes an external audit of these statements is needed. The chart of accounts forms the basic building blocks of the accounting system. It is a list of all the accounts in the business. Hiring a Certified Public Accountant (CPA) to set up the chart in an accounting software package is a worthwhile one-time investment. In accrual accounting revenues are recorded when a sale is made, even if no cash is received at the time of sale, such as a sale on credit to a customer. A tax accountant can prepare financial statements in accordance with Internal Revenue Service (IRS) requirements from the firm’s records when filing for taxes.