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In the presentation, we wanted to keep the topic to being about how to read your financial statements, at a high level, vs the details about how to create one or how they tie out. In my opinion, that can be left to your bookkeeper to make sure that they are giving you accurate information.
If you are using a cloud based system like Xero, the great thing about it is that I can give the various FS buckets a “smell test” by clicking on the line items to pull up more detail. What is the “smell test”? When the bookkeeper gives me the reports, I look at the numbers at a high level and look for any outliers or things that don't seem to make sense. Bookkeepers are not infallible and may have misunderstood what a particular book entry was supposed to be. Don't fault them, this is normal and it happens…just be aware that you have to do the smell test to any reports that you are given, question the numbers, then make the appropriate updates if needed.
As interpreting financial statements can he hard to explain in a short video segment, I want to share with you some other helpful links with break this down to a much simpler instruction if needed –
How to Read an Income Statement
Breaking Down the Balance Sheet for a Business
Reading Financial Statements Cheat SheetFinancial Statements Review (Conference Call) http://rs2386.freeconferencecall.com/fcc/cgi-bin/share.mp3/5595461000-857908-13.mp3
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