Answer to Question #78954 in Finance for Liam Johnston

Question

What is involved in the preparation of financial reports and how they are dealt with in preparing the financial reports. Define any accounting terms that are used.

Answer 1

Financial statements, though often feared as a very intimidating portion of small business accounting, are just a matter of putting the trial balance amounts onto properly formatted statements. The financial statements prepared for most small businesses comprise a balance sheet and an income statement. Usually these are prepared by an accountant. But with the help of computer software, you may be able to prepare your own financial statements. If you need to prepare financial statements for a third party, such as a banker, sometimes the third party may request that the financial statements be prepared by a professional accountant or certified public accountant.