What does it take to be financially successful? You need a good understanding of financial accounting. Financial accounting is the process of recording, summarizing and reporting a company’s business transactions through financial statements. These statements are: the income statement, the balance sheet, the cash flow statement and the statement of retained earnings. In this blog post we will discuss each one in detail so you can get started on your path towards success!

Income Statement: An income statement is a summary of the company’s financial performance for one period, typically “monthly.” It shows revenues minus expenses or costs. The top line in an income statement reports net revenue (or gross profit). Expenses are deducted from this number to calculate total operating expenses and net earnings before interest and taxes.

Balance Sheet: A balance sheet balances two sides – assets on one side, liabilities plus owner equity on the other side. Assets include cash, buildings, inventory etc.; Liabilities includes loans that will need to be repaid at some point; Owner Equity would show amounts paid by people who have invested in the business- these can either be shareholders with limited liability or partners with unlimited liability