Basic Financial Planning Page 7
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9FINANCIAL STATEMENTS
Main Means Of Presenting
Using Information
Financial Information
Information must be managed properly and
some skill specialisation will develop. To
The main statements useful in a business
prevent an ’us and them’ situation where
are the
profit and loss account
and the
a few members have more power simply
balance sheet.
because they deal with finances all the time,
it is important to find ways for all members
The
profit and loss account
shows the cost
to be kept properly informed of the
of operating a business over time, together
organisation’s financial affairs. Information
with adjustments for depreciation, bad debts
must also be presented in ways they can
and creditors.
understand and respond to and this means
the organisation should ensure democratic
A
balance sheet
shows what a business is
control and that members get a chance to
worth on a given date. It is made up of
put their point of view.
what the business owns (like equipment)
and money owed to it (assets) and money
it owes (liabilities). Assets minus liabilities
is the company’s value.
This information can be used to investigate
ways of improving performance or to obtain
new loans, for expansion for instance.
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Parent category: Business