Finance and valuation
Practice financial statements
Practice financial statements are the main reports on a practice's money: the profit and loss statement, the balance sheet and the cash flow report.
The SEC's beginner guide explains that balance sheets show what a company owns and what it owes at a fixed point in time, while income statements show how much money a company made and spent over a period of time. A statement of cash flows, the third main report, reflects how cash moves in and out. The ADA's article on financial elements adds that the balance sheet is related to the income and cash flow statements through a process called articulation. Lenders, buyers and appraisers often ask for several years of these reports. See profit and loss statement, balance sheet and cash flow. A CPA can prepare and explain them.