The Financial Statements provide information about the financial health of your company.
* Business owners, investors, creditors and the Internal Revenue Service uses these states to know the performance of your company in a given period of time.
* Some of the key reports are the Statement of Income and Balance.

Income Statement
* The Income Statement is a formal statement that summarizes a company’s operations (revenues and expenditures) for a specific period of time, usually a month or a year.
* The small business owners use the Income Statement to identify areas of your business that are above or below budget.
* Items that cause an unexpected expense such as telephone, fax, mail, or supply costs, can be identified accurately.
* The Income Statement can track dramatic increases in product returns or cost of goods sold as a percentage of sales.
* Can also be used to determine the liability of income tax.

Balances
* The Balance will help you quickly realize the financial strength and capabilities of your business.
* You can determine whether or not the business has the capacity to expand.
* You will have a clear idea of whether the business can easily handle the ebb and flow of revenues and expenditures.
* Finally, if the business can conlcuir must take immediate action to strengthen its cash reserves.

A Balance of the following occurs:
1. Assets. Assets are anything that has value. Some examples of business assets include cash, accounts receivable, notes receivable, inventory, land and equipment.
2. Liabilities. Liabilities are the amounts that the business owes to others. Usually the biggest liabilities of a business are the providers of goods and services. The liabilities are recorded in the chronological order of payment.
3. Net worth of the owners or shareholders. The property owner is what the business owes the owner, assuming you have paid all liabilities (amounts owed).