A successful business’s performance is directly related to its financial statements. These statements show an organization’s financial position. They allow stakeholders and other parties to understand the company’s performance and make good decisions. Financial statements can be prepared monthly, quarterly, or yearly.

Businesses can approach the team of professional accountants from 

Tampa Bay area CPA to get accurate financial statements and reports. This blog shows the key differences between monthly and annual financial statements.

What are monthly financial statements?

Monthly financial statements are quarterly financial reports that show the company’s performance in the past 3 months. These statements are necessary for every public company. The company must file these monthly or quarterly financial statements with the Securities and Exchange Commission.

Monthly financial statements cover the following things:

Profits and expenses of the company every month or past 3 months

Balance sheet showing the assets and liabilities of the company in a quarter or every month

Financial metrics that measure the monthly goals of the company

Cash flowing in and out of the company every month or in a quarter

Monthly financial statements must be prepared for investors, lenders, CFOs, and financial analysts.

Meaning of Annual Financial Statements

Annual financial statements show the company’s expenses, profits, and equity over the past year. These statements are important for insiders and outsiders, such as regulators and investors.

Annual financial statements cover many things, such as:

• Income and expenditure of the company in a full year
• Assets and liabilities of the company over a year
• Equality details in a year like issued stock and retained earnings
• Risks and operations of the company over a year
• Cash moving in and out of the company

Annual financial statements are required to check a company’s performance and make accurate decisions. They are also important in complying with all regulatory bodies.

Differences between Annual and monthly financial statements

Annual and monthly financial statements are necessary for businesses of several types and sizes. This section shows the major differences between annual and monthly financial statements:

Tracking errors

Tracking errors is an easy job for an accountant in monthly financial statements. In the case of annual financial statements, the accountants have to wait for the whole year to spot errors. They have to search for all the receipts and bills to spot minor errors in the yearly financial statements.

Payments

Preparing monthly financial statements allows the company to process payments promptly. However, in the case of annual financial statements, the company may miss payments to third-party creditors.

Tracking unauthorized transactions

Companies have many vendors who may enter into illegal or unauthorized transactions. While preparing monthly statements, accountants can track these illegal transactions. However, accountants cannot track illegal activity in the annual financial statements.

Saves time and workload

Preparation of monthly financial statements will decrease the workload and save time. The accountants can easily manage all the documents in monthly financial statements.

An accountant takes a lot of time to prepare annual financial statements. They are not as efficient as monthly reports and increase workload.

Purpose

Monthly financial statements focus on the company’s revenues and costs over a month. They show all the company’s investing and financing activities over a year.

While annual financial statements are necessary for tax filing, monthly financial statements show the company’s performance over a month. Both these statements are required for different tasks and give an idea of how the company works.

Businesses can choose financial statements according to their needs. They can gain control over the short-term goals and long-term strategies with the help of these financial statements.