Three statements, each answering a different question, each produced from the general ledger rather than compiled by hand.
Trial balance
Every account with its total debits and credits, for a date range.
Its job is to prove the books balance. Total debits equal total credits, or something is wrong. The surface says which it is.
Read it before the other two. A trial balance that does not balance makes the profit and loss and the balance sheet meaningless, and there is no point looking at either until it does.
It is also the fastest way to spot an account that has received something unexpected, because everything appears on one page grouped by type.
Profit and loss
Revenue and expenses over a period, and what is left.
It is about a span of time. January to March, or the year to date. Asking for a longer period gives you more of everything, which is the flow behaviour that runs through the whole platform.
A net loss is the one thing on this surface that carries a colour. Everything else is deliberately monochrome, so the alarm means something when it appears.
Reading one
Look at the shape before the total. Revenue up and costs up faster is a different story from revenue flat and costs down, and both can produce the same bottom line.
Compare like periods. This quarter against the same quarter last year beats this quarter against last quarter for any business with a season.
Check the period is complete. A part-month always looks alarming.
Balance sheet
What you own, what you owe, and the difference, at a single moment.
It is about a point in time, not a period. There is one date, not a range, and the figures are what they were on that day.
Assets equal liabilities plus equity. That identity is not a convention, it follows from double entry, and if it does not hold the surface says so, which is a genuine alarm rather than a display problem.
Reading one
Look at the shape of what you own. Cash against receivables against everything else. A business with strong assets that are all receivables has a collection problem rather than a strong balance sheet.
Look at what is owed and when. The total matters less than whether it is due next week or next year.
Compare against the same date last year, not against last month. A month-on-month balance sheet mostly shows timing.
Where the numbers come from
All three read the general ledger, which is fed by the automatic postings.
That chain is worth holding, because it tells you where to look when a statement is wrong. The statement is arithmetic over entries; the entries come from mappings; the mappings come from categories. A wrong statement is almost never a statement problem.
Reading the three together
They answer different questions and they are most useful in sequence.
The trial balance answers whether the books are sound.
The profit and loss answers whether the period went well.
The balance sheet answers whether the business is sound.
A profitable period on a deteriorating balance sheet is the pattern worth catching, and it is invisible if you only ever read one of them. Profit that is entirely receivables is the common version.
Comparative periods
Each statement takes a range or a date, so comparison is a matter of running it twice.
Compare against the same period last year for anything seasonal, which is most businesses.
Compare against the immediately preceding period for anything you are actively changing.
Doing both takes a minute and they frequently disagree, which is itself informative.
They are live
None of these are compiled or refreshed. They read the ledger when you open them, so they are current to the last posting.
That has one practical consequence worth knowing: a statement produced before the period is closed can change afterwards, because postings can still land. A statement for a closed period cannot, which is one of the reasons closing matters.
Where the detail is
A statement line is a total, and every one of them opens into what produced it.
That is the answer to almost every question a statement raises. An expense line larger than expected is a list of entries, and the entries name their source: this invoice, that payroll run, this manual adjustment.
Drill before you ask anybody. The explanation is usually one level down and takes ten seconds, and it is considerably more useful to arrive at a conversation with the transaction than with the total.
Currency
Statements are produced in your base currency, with each transaction converted at the point it happened.
That means a rate movement afterwards does not retroactively change what a past month reported, which is the behaviour any auditor expects and the opposite of what a spreadsheet converting at today's rate would do.
Period versus point in time
The single most common misreading of financial statements, and it is the same flow-versus-snapshot distinction that runs through Analytics.
The profit and loss covers a span. Doubling the span roughly doubles everything.
The balance sheet is one moment. Adding two balance sheets together produces a meaningless number.
That is why one takes a date range and the other takes a single date. If a figure is behaving strangely when you change the period, check which of the two you are reading.
What they are not
They are not filed anywhere. The platform produces them; submitting anything to an authority is a separate act.
They are not reviewed. The arithmetic is correct by construction. Whether your treatment of a particular item is right is a professional judgement, and these statements are the input to that conversation rather than a substitute for it.
They are only as good as the mappings. A statement built on a miscategorised year is internally consistent and describes the wrong business. The trial balance is where that becomes visible, which is the third reason to read it first.
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