Let’s talk about accounting! What fun! Many business owners avoid it if they can. But the reality is that avoiding it is a good way to be blind to the results your business is producing, and take the wrong actions because of your ignorance.
Your monthly financial statements should include an Income Statement (sometimes called a Profit and Loss Statement) and a Balance Sheet. You may also get a Cash Flow Statement. I recommend many small businesses measure their “Spread” (Cash + Receivables – Payables) in lieu of a Cash Flow Statement.
An Income Statement has a few different parts. Revenue is first, then Cost of Sales (also called Cost of Goods Sold or COGS). COGS are cost directly associated with selling what was sold in that period. In other words, if you didn’t sell anything, you would not have those costs.
When you subtract COGS from Revenue, you get Gross Profit.
More tomorrow! Go crush some progress on your big goals today!
LOVE IT! Numbers are my thing!
I think it would be great to focus on a topic for a while,get in a little deeper each day, good idea thank you
A refresher is always nice.