How to Make an Accounting Report: A Simple Guide

To make an accounting report, decide who it's for and what period it covers, bring the books up to date with an adjusted trial balance, then build the financial statements in order: the income statement first, then the statement of owner's equity, then the balance sheet, and the statement of cash flows last. Check that the balance sheet balances before you share it.

Billed publishes this page. Here, the term accounting report means the set of financial statements a business prepares from its books for a period. Quotes are from the open textbook Principles of Accounting, Volume 1: Financial Accounting (OpenStax), sections 1.2, 2.1 and 4.5, opened on October 30, 2026. For what each statement shows and how to read it, see small business financial statements. For reports on spending, see types of expense reports.

1. Decide who the report is for

OpenStax says: "The ultimate goal of accounting is to provide information that is useful for decision-making." It says users of accounting information "are generally divided into two categories: internal and external."

• Internal users: "Internal users are those within an organization who use financial information to make day-to-day decisions."
• External users: "External users are those outside of the organization who use the financial information to make decisions or to evaluate an entity's performance."

An outside reader may ask for more than one period. OpenStax gives the example of a bank: "when deciding whether to loan money to an organization, a bank may require a certain number of years of financial statements and other financial information from the organization." Ask what the reader needs before you start.

2. Choose the period

Pick the period the report covers, such as a month, a quarter or a year. OpenStax points out the "change in timing of the report": "The income statement and statement of owner's equity report the financial performance and equity change for a period of time. The balance sheet, however, lists the financial position at the close of business on a specific date." So a report for June 2026 has an income statement for June 1 to June 30 and a balance sheet as of June 30.

3. Bring the books up to date

Record every transaction for the period, make the adjusting entries, and prepare an adjusted trial balance. OpenStax says: "Once you have prepared the adjusted trial balance, you are ready to prepare the financial statements." The steps before this point are covered in what is the accounting cycle and what is a trial balance.

4. Build the statements in order

OpenStax says: "The order of preparation is important as it relates to the concept of how financial statements are interrelated." The first three each take a figure from the statement before it, so prepare them in this order:

1. Income statement. "Income statements will include all revenue and expense accounts." OpenStax adds: "When preparing an income statement, revenues will always come before expenses in the presentation." Take total expenses away from total revenue; the result is net income, or a net loss if expenses are larger.
2. Statement of owner's equity. OpenStax calls it "the second financial statement created by accountants." It says its elements "include investments by owners as well as distributions to owners," and net income is shown on it too. It starts with the opening equity, adds net income and any new investment by the owner, and takes away what the owner drew out. A corporation prepares a statement of retained earnings instead, and OpenStax says it "is prepared before the balance sheet because the ending retained earnings amount is a required element of the balance sheet."
3. Balance sheet. OpenStax says: "Remember that the balance sheet represents the accounting equation, where assets equal liabilities plus stockholders' equity." The equity figure comes from the statement of owner's equity.
4. Statement of cash flows. OpenStax calls it "The fourth and final financial statement prepared". You need the cash received and paid during the period to build it, not only the closing balances.

For what each statement shows and how to read it, see small business financial statements, and the guides to the profit and loss statement, the balance sheet and the cash flow statement.

5. Check it before you share it

• The balance sheet balances: total assets equal total liabilities plus equity.
• Net income on the income statement is the same figure used in the statement of owner's equity.
• The ending equity in the statement of owner's equity is the equity on the balance sheet.
• Each statement's heading gives the business name, the statement's name and the period or date it covers.

OpenStax explains why the checks matter: "investors, lenders, owners, and others rely on the accuracy of this information when making future investing, lending, and growth decisions."

Sample: a one-month report for a sole proprietor

The business and figures here are a sample, invented for this example.

A design studio owned by one person prepares a report for June 2026. Its adjusted trial balance at June 30:

• Cash: debit $6,200
• Accounts receivable: debit $1,800
• Equipment: debit $2,400
• Accounts payable: credit $700
• Owner's capital (June 1): credit $6,050
• Owner's drawings: debit $500
• Design revenue: credit $5,600
• Rent expense: debit $950
• Supplies expense: debit $300
• Software expense: debit $200

Debits: $6,200 + $1,800 + $2,400 + $500 + $950 + $300 + $200 = $12,350. Credits: $700 + $6,050 + $5,600 = $12,350. They're equal, so the statements can be built.

Income statement, June 1 to June 30, 2026

• Revenue: $5,600
• Expenses: $950 + $300 + $200 = $1,450
• Net income: $5,600 − $1,450 = $4,150

Statement of owner's equity, June 1 to June 30, 2026

• Owner's capital, June 1: $6,050
• Plus net income: $4,150
• Less drawings: $500
• Owner's capital, June 30: $6,050 + $4,150 − $500 = $9,700

Balance sheet, June 30, 2026

• Assets: $6,200 + $1,800 + $2,400 = $10,400
• Liabilities: $700
• Owner's equity: $9,700
• Liabilities plus equity: $700 + $9,700 = $10,400, equal to assets.

The statement of cash flows needs the cash receipts and payments for June, which a trial balance doesn't show, so this sample stops at the balance sheet.

Where Billed fits

Billed's financial reporting page says: "Each report can be filtered by date range and exported." It also says: "See your partially paid, past due and paid invoices in a glance with Invoice reports." Running Billed's income vs expense report for the same dates as your income statement gives you a figure to compare your revenue and expense totals with. For a wider view of reporting, see financial reports.

Related Articles

• Small Business Financial Statements
• Types of Expense Reports
• What Is the Accounting Cycle?
• Financial Reports: What They Are and How to Use Them

Frequently Asked Questions

What is an accounting report?

On this page, it's the set of financial statements a business prepares from its books for a period: an income statement, a statement of owner's equity, a balance sheet and a statement of cash flows.

In what order are the financial statements prepared?

The income statement first, then the statement of owner's equity (or retained earnings), then the balance sheet, and the statement of cash flows last. The first three each use a figure from the statement before it.

What do I need before I prepare the statements?

An adjusted trial balance. OpenStax says: "Once you have prepared the adjusted trial balance, you are ready to prepare the financial statements."

Which statements cover a period and which cover a date?

The income statement, the statement of owner's equity and the statement of cash flows cover a period, such as a month. The balance sheet shows the position on a single date, the last day of that period.