This document provides an overview of key bookkeeping and financial basics for small businesses. It discusses common reasons why businesses fail, such as poor planning, cash flow management, and cost oversight. It also outlines typical business costs and expense categories. Additionally, it explains key financial statements - the income statement, balance sheet, and cash flow statement - and how they are used to assess a business's revenues, expenses, assets, liabilities, and cash position over time. Maintaining proper financial records and statements is important for business success.

1. BOOKKEEPING BASICS

2. REASONS PEOPLE
FAIL• FAILURE TO PLAN PROPERLY
• FAILURE TO MONITOR FINANCIAL POSITION
• FAILURE TO KNOW COSTS
• FAILURE TO PRICE PROPERLY
• FAILURE TO PLAN CASH FLOW
• FAILURE TO MANAGE GROWTH
• FAILURE TO CAREFULLY STRUCTURE DEBT
• FAILURE TO ESTABLISH GOOD BANKING
RELATIONSHIP

3. START UP COSTS
BRICK &
MORTAR
ONLINE SERVICE
S

4. START UP
CALCULATOR
SBA.GOV

5. BUSINESS
COSTS?• Rent
• Cable
• Internet
• Phone
• Website
• Business Cards
• Flyers
• Office Supplies
• Insurance
• Services
• Gas
• Travel
• Hotels
• Business Supplies
• Advertisement
• Marketing
• Social Media
Accounts

6. INCOME
STATEMENT• Basic Income Statement Equation:
• Sales Revenue – Expenses = Profits
• Expense Categories: Cost of Goods Sold,
Operating Expenses, Interest Expense, Taxes
• Profit does NOT equal cash; profit is an
accounting concept, not a substitute for a
bank statement

7. INCOME
STATEMENT• Income statement
• Profit and loss account
• Profit and loss statement(P&L)
• Revenue statement
• Statement of financial performance
• Earnings statement
• Operating statement
• Statement of operations
One of the financial statements of a company and
shows the company’s REVENUES & EXPENSES during
a particular period.

8. MULTI-STEP METHOD
Gross Sales - Cost of Goods Sold = Gross Profit
Gross Profit – Operating Expenses
= Operating Profit
(Salaries/Wages, Payroll Taxes, Occupancy Expenses,
Advertising, Travel, Insurance, Utilities, Depreciation, etc.)
Operating Profit - Interest Expense
=Earnings Before Taxes
Earnings Before Taxes -Income Taxes =
Net Profit

9. MULTI-STEP METHOD
The Income statement displays
the amount of gross profit.
Also, includes a special section to
assist you in computing the cost of
goods sold. Learn as you fill in the
required amounts.

10. ASSETS
• Current Assets – Cash, A/R, Inventory, Pre-
paid expenses
• Fixed Assets – Land, Building, Equipment,
Fixtures (less depreciation)
• Other Assets – intangibles (good will, patent,
customer list, etc.)

11. LIABILITIES
• Liabilities
– What a business owes, financial obligations
• Current Liabilities
– Items that must be paid within 12 months
• Long-Term Liabilities
– Items that can be paid in more than 1 year

12. CASH FLOW
STATEMENT
• Shows how cash enters and exits via
business operations. Cash flow
statements report a company’s inflows
and outflows of cash. This is important
because a company needs to have
enough cash on hand to pay its
expenses and purchase assets.
• While an income statement can tell
you whether a company made a profit,
a cash flow statement can tell you
whether the company generated cash.

13. CASH FLOW
STATEMENT
ACCOUNTING COACH.COM

14. CASH FLOW
STATEMENT

15. CASH FLOW
STATEMENT

16. CASH FLOW
• Cash Flows from Assets
• Cash Flows from Operations
• Changes in Operating Working Capital
• Changes in Long-Term Assets
• Cash Flows from Financing
• Increase Debt
• Increase Equity
• Pay Interest/Dividends
• Decrease Debt (pay it off)
• Decrease Equity (company buys back stock)

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