Review Of Financial Reports
In the ReInvestWealth accounting software you’ll have access to your profit/loss report, general ledger report and also your balance sheet report. These reports are designed to help you easily understand your business finances and make smarter decisions.
Profit & Loss (Income Statement)
First, the Profit and Loss report—also called your P&L. Some people also call this report the income statement. This report shows you how much money your business has earned versus how much it has spent over a specific period. It’s perfect for answering questions like: Am I making money? or Where is my money going?" You can see your revenues at the top, followed by your expenses and then your final income.
General Ledger
Second, is the General Ledger. This is like the ‘diary’ of your finances—it records every transaction your business makes. While it’s not something you’ll check every day, it’s super handy if you need to track down a specific transaction or want to double-check your numbers. This is also the best report to provide to your accountant. You can even export the General Ledger with pictures of your receipts.
Balance Sheet
Last but not the least is the Balance Sheet. This report is mainly designed for Corporations and shows you what your business owns, which are the assets, what it owes, which are the liabilities, and what’s left over—also called your equity. In the balance sheet, your assets will always equal your Liabilities plus Equity. In order to see your Balance Sheet, ensure to set the start date as your incorporation date. If you choose a different start date, this report will show your change in the balance sheet.
Extract to CSV / Excel
In ReInvestWealth, you can extract each report to CSV including your uploaded receipts, which can be super helpful if you want to send the report to your own accountant.
The Benefits of Reviewing Financial Reports
1. Gain Clarity on Financial Health
Financial reports like the profit and loss statement and balance sheet give you a clear picture of your revenue, expenses, and net worth. This clarity helps you understand where your business stands financially, empowering you to take proactive steps if needed.
2. Make Data-Driven Decisions
Whether it’s expanding your business, cutting costs, or investing in new opportunities, financial reports offer the data you need to make informed decisions that align with your goals.
3. Monitor Cash Flow Effectively
Reviewing your reports ensures you keep a close eye on cash inflows and outflows. This helps prevent liquidity issues and ensures you have the funds to meet operational needs.
4. Simplify Tax Preparation
Financial reports make tax preparation straightforward by keeping all your financial information organized and up-to-date.
Frequently Asked Questions
What is a profit and loss statement?
It’s a financial report summarizing revenues, costs, and expenses over a specific period, showing whether your business made a profit or incurred a loss.
Why is the P&L important?
It helps assess profitability and provides insights into revenue and expense trends.
What are common items on a P&L?
Revenues
Expenses
Income Taxes
Net Income
What is a balance sheet?
It’s a snapshot of your business’s financial position at a given moment, showing assets, liabilities, and equity.
Why is the balance sheet important?
It helps evaluate liquidity, financial stability, and long-term solvency.
What are the key components of a balance sheet?
Assets (e.g., cash, receivables, equipment, property)
Liabilities (e.g., loans, accounts payable)
Equity (e.g., retained earnings, owner’s capital)
How does the balance sheet relate to the P&L?
While the P&L shows performance over time, the balance sheet provides a snapshot of financial health at a specific moment.
What is the formula for the balance sheet?
Assets = Liabilities + Equity