Financial reports are the periodic reports of information on financial statements of a company, including its financial position and performance, for the use of management or an external party. The four primary financial reports in business are the balance sheet, income statement, cash flow statement, and statement of shareholders’ equity.

The Purpose of Financial Reports

Financial reports have two primary purposes:

They assist management in effective decision making regarding the objectives of the company and its overall strategies. The information provided by the reports can help the management to determine the strengths and weakness along with the financial health of the company.

They deliver important information about the financial condition and undertakings of the company to its investors along with its shareholders, consumers, analysts and government regulators. (more…)

“The balance sheet is a snapshot of the company financial standing at an instant in time”

Do you know what are the Parts of a Balance Sheet? The Balance Sheet can be broadly broken into two sections, namely “Assets” and “Liabilities”.  Assets are what a business uses to operate its business, while its liabilities and equity are two sources that support these assets.

The first step in understanding a transaction is to recognize whether the transaction is in relation to revenue or expense or is capital in nature. Only transactions of capital nature are reflected in Balance Sheet. For Example, any advances received from the third party will be shown on the assets side of the Balance Sheet and not as an income in the income statement, as it is capital receipt in nature.

Parts of a Balance Sheet –  Categories

Fixed Assets:

These include tangible assets like buildings, machinery, furniture, or intangible assets like Patents, Trademarks, and Goodwill. It shows all the assets that are present with the business to provide with long-term benefits and are not expected to liquefy before a year. (more…)

The term bookkeeping is comprised of the two words ‘Book’ and ‘Keeping’ where ‘Book’ means the collection and retention of financial activities and ‘Keeping’ is their maintenance. In this sense, bookkeeping is a process of collection, retention and maintenance of the financial activities of a company. In course of time it has been developed as a discipline.

Bookkeeping provides the information from which accounts are prepared. It is a distinct process that occurs within the broader scope of accounting. It ensures that records of the individual financial transactions are correct, up-to-date and comprehensive. Accuracy is therefore vital to the process. (more…)

We all have bad days. Sometimes we make an error while manually entering data, send the data to the wrong place, or mix up figures of sales order in our accounting system. But having an integrated system of ERP and CRM can reduce those vexatious data handling errors.

What do ERP Systems Do?

An ERP system manages important backend information i.e. customer’s information, history, accounting information, supply chain details, billing and shipping, and financial data after the order is placed. When integrated with the accounting system this system offers potential benefits to the business.

What CRM Do?

CRM deals with frontend information by handling valuable customer’s data and utilizing it with interactions and customer support. It helps managing sales pipelines along with upselling and cross-sell products and understand client’s prospects.

Integration Challenges

One option to streamline integration between the two is a custom point-to-point integration. This is a fragile method and quite difficult to maintain. A developer has to implement changes and manage connectivity for point-to-point connections. As changes affect the entire systems it creates a high chance of errors. This point-to-point integration provides a short term solution but gains complexity as the business grows. (more…)

A balance sheet is a complete description of the financial health of the business. Preparing a balance sheet will help you to evaluate the assets of your company when stacked against its liabilities to estimate the financial health of your business.

“Terribly important to draw up a balance sheet every now and then, debits and credits. Decide what’s important, what’s worth fighting for.” Lynne Reid Banks

Key Parts of a Balance Sheet

1. Basic Equation

This equation is the fundamental concept of the balance sheet. It states the liability and owner’s equity of a business are equal to the total sum of its assets.

Assets = Liabilities + Owner Equity

All balance sheets are based on same formula.

2. Assets Calculation

Investments, money and the financial resources that a company holds are termed as its assets. These assets are stated on the balance sheet by their liquidity, basically their value if immediately converted to cash. Your company can possess two types of assets: (more…)