Types of Records Maintained by XERO Bookkeepers Toronto

 The accounting system for your business requires several types of records. While there are plenty of documents referred to as financial records, which include receipts, invoices, and journals, the main accounting records that are maintained by Xero bookkeepers Toronto are types of financial statements that show the financial status of a business. Different records have different purposes, as discussed below.  

Cash flow Statement

This borrows information from the income statement and the balance sheet. The cash transactions in a balance sheet are transferred to the cash flow statement. For instance, if you purchase equipment on a cash basis, it increases long-term balance sheet assets and appears as a cash outflow on the cash flow statement. Expenses on the income statement are listed as a cash outflow on the cash flow statement. In the end, a cash flow statement shows how much cash was taken and how it was used.

Statement of Retained Earnings

This report uses the net income shown in the income statement and shows how profit has been retained in the business in accordance with the accounting principles. The closing retained balance from the previous period is the opening balance for the statement of retained earnings in the current period. The net income from the income statement plus retained earnings opening balance, minus dividends paid, shows how much profits increased or decreased compared to previous accounting periods.

Balance sheet

This is a summary of the balance in various accounts based on the cash and accrual transactions of the period. All these transactions are reported by Xero bookkeepers Toronto in other basic financial reports. Credit sales are added to the accounts receivables, while cash sales on the income statement are added to the balance sheet cash account. The values on this report fluctuate depending on the transactions.

Xero bookkeepers Toronto enable you to keep tabs on what you are doing in the business. Numbers do not lie; if they are properly utilized, they can help you go far.