How to report Profit, Losses and Cash flows

There are different kinds of financial statements for reporting cash flows in a business such as income statement and statement of cash flows. These cash flows statements are different from balance sheet in a respect that they report the flow of cash for a specific period of time. For a business two types of cash flows statements are prepared by the accountants. These statements are explained briefly as under:-

The Income Statement

Income statements records the cash inflows from the revenue generated from the sales and income. The offset used for these cash inflows are the cash outflows generated by the expense of the business. The net profit or the loss is calculated by deducting expenses from the final generated income. The finally achieved figure is called net income or net loss. Income statement is alternatively called profit or loss statement as well.

The Statement of Cash Flows

This statement records the cash inflows and outflows of a business for a certain period of time. Cash flows are categorized in different categories such as cash flows from generating sales and occurring expenses. Another form of cash flow is occurred by selling or purchasing the assets and the third type of cash flow occurs when capital is raised by the business from owner’s equity or from debt and returning the profit to the shareholders.

These two statements and the balance sheet together constitute in providing the hard core financial information of a business to some outsider as well as to the managers.

Other Related Accounting Articles:

• Bookkeeping
• Accounting Methods
• External and Internal Balance Sheet
• General Ledger
• Headline Earnings
• Accounting for Non-Trading Concerns
• Chart of Accounts
• Generally Accepted Accounting Principles (GAAP)
• Analyzing Account Receivables
• Accounting For Consignment / Consignment Accounts rules