All businesses produce financial statements that

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: formation about the organization’s financial health. This information can help you to compare what the organization predicted would happen to what is actually happening. That information is used by the senior managers to make important decisions regarding the organization’s future. The three main financial statements that are produced in addition to the budget are: All businesses produce financial statements that provide different information about the organization’s financial health. The Balance Sheet (also called a Statement of Financial Condition or Statement of Financial Position) The Income Statement (also called a Profit and Loss Statement, Statement of Operations, or Statement of Earnings) The Cash Flow Statement If you are a manager, you will want to be familiar with these documents so that you can read and interpret the information. Then you can compare the information to the budget as a means of determining how you are doing in operating your own division or department. In the following chapters, we’ll look at each of these statements individually to understand: How the statement is created How to read the statement What the statement tells you, and just as importantly – What the statement does not tell you However, none of these financial statements can be created without information from your organization’s accounting or bookkeeping information. In fact, you cannot read the budget completely until you have a basic understanding of certain aspects of accounting, particularly the Chart of Accounts. Download free ebooks at 16 Financial Information Related to the Budget Managing Budgets 3.2 Bookkeeping and the Budget Bookkeeping is the act of keeping up with the changes in an organization’s accounts. Every time your organization performs a transaction of any kind, the accounts (books) change. While these changes are not reflected in the budget, they do affect the budget because you might need to make adjustments to where your funds are allocated depending on what changes have occurred. For example, imagine you operate a retail establishment. If you find that...
View Full Document

Ask a homework question - tutors are online