Financial statements in QuickBooks are the formal annual reports. Through these basic accounting statements, corporate management can communicate financial information to all the internal and external users. These users can be owners, management and employees and other external parties such as investors, creditors, tax authorities, government, etc. QuickBooks financial statements are also useful in planning, decision-making and exercising control. The financial statements reflect a combination of recorded facts, accounting principles, basic accounting assumptions and personal judgments.
The term financial statement in QuickBooks can also be known as one of several types of schedules and summaries of financial information. Generally, however, these statements describe a set of documents that consists of an income statement (also known as a statement of operations), a balance sheet (known as a statement of financial condition), and a cash flow statement.
The income statement is a report that summarizes the outputs of your business operations for a certain accounting period. It explains few of the changes in the assets, liabilities and equity of an entity between two consecutive balance sheets. It provides information relating to return on investment, risk, financial flexibility, and operating capabilities.
For example, you may want to know the profits or losses of your business over the past few months. Therefore, you prepare an income statement that lists all your revenues and expenses, and evaluates the profits or losses for the month.
The balance sheet is a report that showcases the financial status of your business entity at a specific time. It reports about your organisation’s economic resources (assets), economic responsibilities (liabilities), and residual claims of proprietors (owners’ equity).
Generally, a balance sheet has two sides: the left, assets and the right, liabilities and owner’s equity. There is a fundamental equation that governs all accounting that is:
Assets = Equities
Assets = Liabilities + Owner’s equity
Basically, you prepare a balance sheet at the end of the period that an income statement covers. For example, if you create an income statement for a month, you may also want to create a balance sheet on the last day of the month.
Cash Flow Statement
A cash flow statement outlines the cash inflows and outflows of a business for a specific period of time. A cash flow statement shows various items which bring out the changes in the cash balance between two balance sheet dates. It is prepared in addition to the income statement and the balance sheet. This is because the income generated during a specific period has no direct relationship with the cash flows related with the operations of that period.
Typically, you prepare a cash flow statement for the same accounting period for which you prepare an income statement.
Importance Of Financial Statements
QuickBooks Financial statements form the fundamental sources of information for all the internal and external users. With the help of these accounting statements, stakeholders try to analyze the profitability and financial position of your concern. Thus, the primary goal of financial statements is to help the users in taking the suitable decisions. The specific goals of these financial statements are as follows:
- economic resources and responsibilities of a business entity.
- earning capacity of the business.
- potential cash flows along with their amount, timing and related uncertainties.
- effectiveness of management in using the business resources.
- business activities having an effect on the society.
- accounting policies, concepts and the changes that are taken during the year.
How To Create Financial Statements In QuickBooks?
Use these given steps to create financial satement in QuickBooks:
How To Prepare An Income Statement In QuickBooks?
If you want to create an income statement in accounting software such as QuickBooks, then apply these steps carefully:
- Search the income statement in QuickBooks, according to your version.
- Now choose your income statement report format.
- Customize your income statement according to your required preferences, like statement basis, dates, columns, notes, and many more.
- Produce your income statement.
- Save, print, and send your income statement.
How To Create A Balance Sheet In QuickBooks
If you want to create a balance sheet in QuickBooks, then you have to follow some steps. They are:
- Open QuickBooks and select the account from the file menu from which you want to create the balance sheet.
- Click on the Reports and choose Company and Financial option from the drop-down menu.
- Select the type of balance sheet that suits your current requirements from the submenu.
How To Create Cash Flow Statements In QuickBooks?
If you want to generate statements of cash flows in QuickBooks, then you have to implement some steps. Steps are:
- From the Home page, click on the Reports located on the left menu bar.
- Click on the All Reports tab. Statement of Cash Flows is the fourth report listed in the report center.
- Now you have several report filters to choose from. They are indicated below:
- Print:- You have the ability to print this report.
- Email:- You can email this report to anyone that you would like to review it.
- Export:- You can export this report to Excel and make notes or do further analysis.
- Customize:- This feature allows you to customize a number of areas of the report, including but not limited to the following:
- General info: Date range.
- Level of detail to show: One total column or one column for each month.
- Header/Footer: Change or add title or page #.
- Numbers: Select font for numbers.
- Save customizations:-Allows you to save any custom changes that you have made to the report so that you can use them again.
- Transaction Date:- Select the time period that you would like to run the report for.
- Calendar:- You can enter a specific date range that you would like to run the report for.
- Click the Run Report button once you have made all of your selections.
- Click the Finish button, and your Statement of Cash Flows will display on the screen.
As we all know that Financial Statements in QuickBooks play a very crucial role in identifying your business results in a specific accounting period. QuickBooks Financial statements can be in the form of income statements, balance sheets and cash flow statements. These principle statements are helpful in decision-making for your business. If you want to create income statements, balance sheets and cash flow statements in QuickBooks then by following the above-mentioned steps you can easily generate them without any difficulty.