1.4 Financial Statements

These are reports gathered from the daily transactions and prepared as a means of communicating significant accounting information to users. Generally, there are four financial statements prepared in manual accounting. The Statement of Owner's Equity is not prepared as a separate financial statement with the use of QuickBooks Pro, but it is incorporated in the preparation of the Balance Sheet. QuickBooks Pro offers three major financial statements:

  1. Profit and Loss Statement – is a financial statement that shows the net operating results of the business. It summarizes the revenue earned and the expenses incurred over a specific period of time. This is also called the Income Statement.

  2. Balance Sheet – is a financial statement that shows the financial position of the business as of a given date. QuickBooks Pro incorporates the Statement of Owner's Equity in the Balance Sheet, which would have been a separate financial statement prepared in manual accounting. QuickBooks Pro presents the Equity section of the Balance Sheet in detail to include the Owner's Investment, Owner's Draw, Retained Earnings, and the Net Income or Net Loss for the period.

  3. Statement of Cash Flows – is a financial statement that shows the changes in the cash position of the business. It presents the sources of cash and the application or uses of cash which allows the users of this financial statement to analyze the causes of the increase and decrease in cash for a specific period of time.

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