And, um, a good cashflow statement isn’t always available. So a balance sheet should be able to tell you, um, where you’re at financially. Yeah. Um, so how does the balance sheet tell me if I’m losing money from possible theft? So, um, and, and this is a good question cause um, there are, um, a lot of accounting software that use undeposited funds. So if you are looking at, um, your cash state, uh, your, your balance sheet, all your bank accounts you can reconcile, but your undeposited funds, those are the ones that, um, you don’t necessarily see in your bank yet, but sometimes you don’t check if those funds are actually available to you. So your, your petty cash or any checks that have not been deposited, do they exist? Um, would you be, if you’re a deposited funds is growing exponentially on a, uh, on a monthly basis with Edmonton Bookkeeping.

It might be that you’re losing money through tech because these cash are not actually available to you. You’re not hitting the bank, but are you seeing them on your cash register? Are you seeing the checks in your, um, safe box? So those are the things that might, um, be able to tell you. Am I losing money because of theft? Especially if you have another employee that’s not arms length. Right. Yeah. Good. Um, well my balance sheet, tell me if I’m going to have a cashflow problem. Yeah.

Again, um, your cash and all your liquid funds show on your balance sheet. So, um, it should be able to tell you, um, at what level of cash you’re, and if your accounts receivable isn’t there, then if they’re both at a low level, then your liquidity just school’s really, really, uh, down, right? So that should, um, give you, um, a signal saying, Hey, I need cash the style or we should, I mean, will I need financing in the next couple of months with Edmonton Bookkeeping?

Will I need to contribute again to my business? And so those are the stuff that you, you, uh, want to look at if you’re looking at your balance sheet income statement. Yeah. Um, so what should my income statement look like? Your income statement should look like? Um, first of all, it should fit all in one page. If you can fit it in one page. Um, especially for a small business, um, it would be a lot harder to make your decision out of it. Chances are you’re gonna, you’re gonna have a lot of extra, um, expense accounts in their revenue accounts and there doesn’t necessarily have to be classic classified separately. And it is very, um, it is very common for us, especially in our industry for the accountants, for the book you pers to be really new, really. Um, um, what’s the term? Um, it, uh, we want to be very accurate and we want to you fair and consistent to the point, uh, very consistent to the point that we’re categorizing each one.

Um, as a separate accounts just to show you that we know what it is, but really, um, you just want to be able to have a simplified income statement that would tell you what account is really affecting my, um, my revenue. So your revenue should be, uh, it could just be one line and in a max when we recommend just having three categories that would, um, explain your revenue. And as far as expenses, school, you want to go numerically descending to see which, uh, expense accounts are actually affecting your revenue or your property or bottom line or what’s driving your costs. Um, sometimes you will have costs of goods sold, especially if you’re a merchandising company. So, um, those are very important to look at too. They should be, um, relatively, um, growing or, uh, decreasing when your revenue, uh, grows or decrease as well with Edmonton Bookkeeping.

Yeah. So y’all, when you mentioned about, um, numerically descending for your expense accounts and uh, so what’s the value of that? Like why would you do it numerically descending again? Um, we as business owners, we try and make our expenses as low as we can, but to the point that we’re going to look at the back, uh, the back statements and see who could give us the better, um, rates, uh, can give us the, the better, um, interest rate and stuff like that. Right. But if you look at your expense center numerically descending order, you’d be able to tell which, um, accounts I should be looking at first before I even go to the interest and bank charges or utilities. Maybe my rent is very high, that I have to um, focus on how I can, I would be able to maintain my business, um, just by keeping my rent or my supplies.

If I need my supplies that much. Maybe I should be talking to my, in, um, my suppliers as opposed to look, spending so much time on a bank statement, trying to lessen your, um, your map charges. So those are the things that you might want to look at if you’re looking at it in numerically sending order. The biggest ones are the ones that really matters in your business. Yeah. So what will my income statement tell me on a monthly basis yet? So once again, a comparative monthly, uh, statement be both tough to tell you any seasonality on your business. We talked about the payroll before we talked about, um, uh, seasonality. So if your revenue is, um, having a higher, um, revenue stream on one month, maybe you should plan on advertising for that month. So stuff like that would be able to give you a clue on what you should focus on on, um, seasonality or, um, any, uh, one off expenses that might not show up every month as with Edmonton Bookkeeping.

Yeah. Um, so does the income statement show how my expenses affect my income? Yeah, absolutely. So again, one of them would be your advertising. Like if you’d be able to tell ’em if spending on advertising is actually increasing your income on a monthly basis or maybe takes a while before your revenue, um, shows up from this, um, advertising initiative, right? So a stuff like that you, uh, you’d be able to tell, um, just when you’re looking at your income statement, you don’t necessarily just want to go, um, on a comparative basis, which is what we call the horizontal mail says you want to go, uh, vertically as well as my, uh, payroll or my, um, for service industries specialty is my payroll. Just defining how much I am generating if I’m, um, uh, charging in the hourly basis rate. So those are the stuff that you want to look at as well on a vertical consistent, uh, on your income statement now that we have Edmonton Bookkeeping.

Yeah. Um, so your way, is it beneficial to look at a monthly income statement? If my business is seasonal? Yeah, and I think I talked to [inaudible] I hadn’t myself. So again, um, the one offs, uh, E it would be able to tell you if it’s a comparative monthly statement. Uh, let’s see if, uh, let’s say you ha you spend big on advertising this month, but you won’t necessarily do it every six months. By looking at it on a monthly basis, you’d be able to tell that I might not consider this factor. Um, it, uh, in deciding on my day to day basis or month to month basis. So just a, a knocking those, um, uh, uh, one-offs out of your decision making process just makes it a lot easier. Yeah, yeah, yeah. Great. Y’all wait, that’s all the questions I have. You’ve had a lot of information for tips on how to read your financial statements. So thanks for answering those questions. Uh, I hopefully, and you find it helpful. If you have any questions, feel free to comment and subscribe, uh, uh, on tour page and we’ll get to you as soon as we can. Also please hit like, and subscribe if you enjoy watching the videos and we’ll see you guys on our next video. Hopefully with Edmonton Bookkeeping we can help you!.