When I opened my logistics company in 1993, I had very little exposure to financial statements beyond the principals of accounting class I took in college (I graduated with two undergraduate degrees, one in marketing and the other in transportation and logistics).
What I did know about financial statements came from my experience as the general manager of a small truck line. In this position, I reviewed the monthly income statement the firm’s CPA delivered each month. I did not understand or use the other financial statements the CPA prepared.
Once my logistics company was up and running, it was evident that I needed more financial management and accounting information than an income statement could provide. This is when I began to learn about the other financial statements that were available to small business owners.
Right after I opened my logistics firm, my accountant recommended that I use a DOS version of Peachtree as the accounting system for my company. With his help, I set up Peachtree and began to use it to track the financial progress of my entrepreneurial business. As Microsoft’s Windows for Workgroups became the standard for workgroup networking, I migrated my company’s accounting to QuickBooks for Windows. Through this experience, I learned that both of these small business accounting software products provide most of the financial statements a small business owner needs.
During this time I also learned that financial statements are truly the report cards of business that small business owners and entrepreneurs need to understand.
In this blog series, I will discuss each of these financial statements in more detail.
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