Kinxso Accounts — 7. Reports — and how to read them

What each report tells you, what it cannot tell you, and the checks that prove your books are sound.

The three that matter most

Trial Balance

Reports → Trial Balance lists every account with its total debits and credits.

Its one job is to prove the ledger is internally consistent: the two columns must total the same. If they do not, something is wrong at a level that makes every other report unreliable, and it should be fixed before you read anything else.

A balanced trial balance does not mean your books are correct. It means they are arithmetically consistent. An amount posted to the wrong account still balances perfectly.

Profit & Loss

Reports → Profit & Loss covers a period of time and answers "did we make money?"

  Income
− Cost of goods sold
= Gross profit
− Expenses
= Net profit

Gross profit tells you whether what you sell is sold at a sensible margin. Net profit tells you whether the business as a whole is viable. A healthy gross margin with a loss at the bottom means your overheads are the problem, not your pricing.

The report also shows gross and net margin as percentages, which are more useful than the raw figures when comparing one month with another.

Balance Sheet

Reports → Balance Sheet is a snapshot on one date and answers "what is the business worth?"

Assets = Liabilities + Equity

That equation always holds — the report tells you whether it balances. Equity includes the profit for the current period, which is why the Balance Sheet and the Profit & Loss always agree with each other.

The rest

Report	Use it to
Cash Flow	See where cash actually moved. Profit is not cash — you can be profitable and unable to pay wages.
AR Aging	See who owes you, grouped by how overdue they are. Your collections list.
AP Aging	See what you owe and when. Your payment planning list.
Tax	Prepare a tax return from what was actually charged and paid.
Ratios	Track margins, liquidity and the shape of the business over time.
Consolidated	Combine several agencies into one set of figures.
Custom	Build a report on the rows and columns you care about.

Checking your own books

Four checks, in order. If all four pass, your books are in good shape.

Does the Trial Balance balance? If not, stop and fix it.
Does the Balance Sheet balance? Assets should equal liabilities plus equity.
Does every bank account reconcile to its statement? This is the real proof.
Does AR Aging total agree with the Accounts Receivable balance on the Balance Sheet? If not, a

payment has been recorded against the bank without being matched to an invoice.

A warning about profit and cash

The most common misreading of accounts is treating profit as money in the bank. They are different questions. You can show a strong profit while your bank account empties, because your customers have not paid yet — that profit is sitting in Accounts Receivable, not in cash.

Read the Profit & Loss to understand whether the business model works. Read the Cash Flow and your bank balance to understand whether you can pay people next week.