Managing Your Finances For A Business Essay

721 Words Nov 9th, 2015 3 Pages
In running a business, it may behoove the owner/manager to realize how the money is flowing in and out of the business. Managing your finances can be hard, but to manage all the finances for your business to long and tedious. There are many tools used to assist as in using an income statement or a balance sheet to visualize where the money is going. Anyone who owns a business wants to know how much his/her business is making in profit and to know when they start losing money to try and salvage what they might have left. Income statements shows the revenues generated and expenses incurred and only shows a quick overview on how much income is taken in by the business. The statements typically will show overall profits, operating expenses and total income earned for the accounting period. The overall profits are calculated by taking the difference of revenue generated and the cost of the goods sold. Operating costs are to include selling, general and administrative expenses, such as salaries, and the depreciation in value of the physical assets like building and equipment. Interest paid on financed liabilities is also an expense that needs to be taken into account in the overall income of the business. While it may interested to know how much your business is making over time, it’s typically beneficial to have a balance sheet to see how the business is doing monthly, quarterly or yearly. The balance sheet will explain the more in a sense of the differences between a…

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