Financial statements reflect the health of a business as the life of every business is reflected in its books. It is very important that business owners familiarize themselves with the financial statements and not only leave it to the accounting team. The more you know about your financial statements the better, this enables you to be in a better position to make sound judgement in regards to the decisions you make when you know how your business is doing financially. It is very important that you do not exclude yourself as a business owner but familiarize yourself enough to at least have an idea of what is happening in your financial statements.
The statement of financial position also known as the balance sheet will reflect the business’s financial position or value at a specific point in time. It reflects the business’s assets, liabilities and equity.
The benefits of knowing what is happening in your statement of financial position includes:
It will assist you to review your business performance.
You will need to produce it when looking for investors for your business.
It is it vital for your business plan.
Required for Annual Financial Statement.
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