The Most Important Financial Statement and how a Virtual Bookkeeper Can Help

Suppose you have to look at only one statement (and no other statement at all); which one will you choose to understand the company's financial position? It is a question that a lot of accountants debate. Here is our take on it.

The Most Important Financial Statement and how a Virtual Bookkeeper Can Help

We all know that four financial statements make up the complete set of financial documents of a business. However, none of the statements alone can show a complete picture of the company's standing, and they must be seen in unison to make sense of all the aspects of a company's financial standing.

But suppose you have to look at only one statement (and no other statement at all); which one will you choose to understand the company's financial position?

It is a question that a lot of accountants debate. So here is our take on it.

In this blog, we’ll discuss the most important financial statement, and how you can outsource your bookkeeping tasks to a Quickbooks virtual assistant.


Financial statements are summarized records of an entity’s financial activities prepared under generally accepted accounting principles. It shows the entity's financial position, profitability, and growth potential. A set of financial statements comprises -

1. Balance sheet or Statement of financial position: It is a statement reflecting an entity’s assets, liabilities, and owner’s equity at any given time; in other words, the balance sheet provides details of the company's sources of funds and utilization. A balance sheet is based on a simple equation: ASSETS = LIABILITIES + OWNER’S EQUITY

2. Profit and Loss a/c or Income statement: It reflects the entity’s revenue, expenses, and profits/losses for a given period. It helps us understand the business's operations, including revenue from operations, cost of sales, non-operating expenses, and tax effect.

3. Cash flow statement: Statement highlighting cash generated or cash incurred by each of the following classes of business activities: Operating, Investing, and Financial, over a given time.

4. Statement of equity: It highlights changes in owner’s equity over a given period. Change in equity may be due to numerous factors like- the issue of new shares, the dividend paid, profit/loss during the period, change in accounting policies, etc.

man looking at report on his laptop screen

Now, let us return to our question, “Which is the most important financial statement?”

Most of us believe that the income statement is the most important financial statement as it shows the profit generated by the business. But do you think profit alone is the correct way to measure the performance of any business?

Let us try to understand this with an example. Entity A earns a net profit of $10,000, and Entity B earns a net profit of $8,000. By looking solely at the income statement, the opinion we derive will be Entity A is a better-performing entity. Now, if I add more information, the amount invested by Entity A is $100,000, and that for Entity B is $64,000. Do you still believe Entity A is better? Definitely not. Return for Entity A is 10% while it is 12.5% for Entity B, which implies entity B is a better performing entity.

The income statement does not show the return on investment, which is ideally a better way to understand the financial performance of any business. So then, what is the answer to our question?

The most irritating answer we can get to our question is, "it depends!". Unfortunately, we have no choice but to give this irritating reply here - because that is the truth. But do not worry; we will not leave you with this cliffhanger. We will work together through a model to help us choose "the statement" from the set.

Let us dive in further and figure out which statement you should choose. To understand this, we will have to look at your different objectives for selecting the correct financial statement.

We all know that a business cannot operate without cash. The cash flow statement reports the movements of cash and its effect on an entity's cash position over time. Cash is vital to a business's survival, making this statement very important.

But why is the cash flow statement the most crucial statement?

Whenever we evaluate whether to grant credit or not, what is the first thought that comes to our mind? For every one of us, the answer to this question remains the same. “Whether I will be able to get my money back?”

The answer to this obvious question is derived from the cash flow statement, which makes it the most critical statement in the following cases - granting a loan to an entity, extending a credit facility to a supplier, vendor, or customer, or when we are investing for a long term in any business.

Now you must be wondering, how does the cash flow statement answer the question?

The statement of cash flows summarizes the inflows and outflows of cash (and cash equivalents) for a business over a period. To aid our understanding, these cash flows are divided into three categories: Operating, Investing, and Financing. Then, cash inflows and outflows falling within each category are added to provide a total for that category.

These totals are shown on the statement of cash flows and, when added together, reveal the net increase or decrease in cash (and cash equivalents) over the period. And when we know whether the entity can generate cash or not, we get a fair idea about the safety of our investment or credit granted.

But, if you are planning to acquire a company, the cash flow statement does not serve the purpose. In that case, the balance sheet becomes the most important financial statement.

How does the balance sheet serve our purpose?

The statement of financial position (Balance sheet) shows the various assets (including cash) and liabilities (including the shareholders’ equity) of the business at a particular point in time. It provides insights into how the business is financed and how the funds are deployed. In addition, the balance sheet shows the contribution made by owners and outside lenders. It also highlights the types of assets acquired.

The balance sheet gives a fair valuation of the business, which is the first step in acquiring the business. It helps in measuring the performance of a business. The effectiveness of a business in generating wealth can usefully be assessed against the amount of investment involved.

Thus, the relationship between the profit earned during a period and the value of the net assets invested can be helpful for many of us.

Does that mean the Income statement is not essential?

Of course, not. The income statement will be the most important if you want to evaluate a business's performance or ascertain your tax liability.

The income statement (Profit and loss account) measures and reports how much profit a business has generated over time. It is, therefore, an essential financial statement for many users. It simply shows the total revenue generated during a particular reporting period and deducts the expenses incurred in generating that revenue.

The difference between the total revenue and expenses will represent either profit (if revenue exceeds expenses) or loss (if expenses exceed revenue).

If you feel your time can be invested more wisely than spending it on figuring out which financial statement works best, you can hire a virtual assistant to help you manage your finances.


Who are Virtual Bookkeepers?

Virtual bookkeepers are independent contractors or individuals sourced from an outsourcing agency, such as Wishup, who assist you with your business bookkeeping and accounting needs remotely. They work similarly to in-house bookkeepers, the only difference being that they are not physically present in the office.

Online bookkeeping services require access to your financial documents to be able to provide their services, and they use secure software such as FreshBooks and QuickBooks. Apart from that, all Wishup virtual bookkeepers must sign a non-disclosure agreement, ensuring your data's security and confidentiality.

What tasks can Virtual Bookkeepers do?

Let’s discuss the tasks you can outsource to a virtual bookkeeper.

Manage QuickBooks

A virtual bookkeeper can help with the following QuickBooks tasks -

  • Maintaining books of accounts up to date.
  • Setting up auto reminders.
  • Setting up auto payments.

Data entry

Virtual bookkeepers can assist with data entry tasks such as -

  • Accurately recording all transactions
  • Classifying them under the correct ledgers
  • Precisely summarizing records
  • Maintaining adequate documentation of financial transactions.

Accounts Payable management

You can assign these accounts payable responsibilities to your virtual assistant -

  • Purchase order generation
  • Vendor management
  • Invoice management
  • Expense tracking
  • Timely payment of invoices

Accounts receivable management

A virtual bookkeeping assistant can help you with accounts receivable tasks such as -

  • Creating invoices
  • Maintaining customer records
  • Tracking collections
  • AR Ageing analysis
  • Debit/Credit notes
  • Creating provisions


Your virtual bookkeeper can assist you in reconciliation tasks like -

  • Vendor payment reconciliations
  • Bank reconciliations
  • Credit card reconciliations

Assist in preparing Financial Statements

Your virtual bookkeeper can prepare financial statements such as -

  • Income statements
  • Balance Sheets
  • Cash flow statements

To make this process even more efficient, you can use financial reporting tools that automate and streamline the creation and analysis of these crucial documents.

View More Virtual Bookkeepers

How to hire a virtual bookkeeper from Wishup?

Hire a bookkeeper from Wishup is a really simple process and can be done in three simple steps.

  1. Make a detailed list of the tasks you need assistance with. Every business is different, and this will help us pair you with the right virtual bookkeeper.
  2. Schedule a free consultation with a team member, and let us know your requirements.
  3. After the call, we will search our roster for the right match and help you onboard a virtual assistant to your business in less than 24 hours.

We recommend working closely with your virtual bookkeeper during the first few days to brief them about their job responsibilities and ensure they are on the right track.

Additionally, we assign a client success manager to all our clients, and you can reach out to them with any questions or concerns.

Perks of Hiring a Virtual Bookkeeper from Wishup

  1. Work with the top 1% of talent

When you hire from Wishup, the recruitment efforts are taken care of by our internal team. We hand-pick, vet, screen, and hire only the top 1% of talent to our company.

  1. Pre-trained virtual bookkeepers

After being hired, our virtual assistants undergo an extensive four-week training program where they are familiarized with over 70+ helpful tools they will use on the job.

  1. Free trial period

We offer all our potential clients an opportunity to experience our services before deciding to subscribe. You can avail of a 7-day trial to test out our virtual assistance services free of charge before making a payment.

  1. Instant replacement

If at any point in your subscription you are unhappy with the services of your virtual assistant, you can contact your client success manager, and we will offer you a no-questions-asked instant replacement. We will assign you a new virtual assistant in a matter of hours.

  1. Option to work with both US-based and Indian talent

We have virtual assistants located in both India and the United States, and you can hire either depending on your budget or preference.


Let us manage your finances. Hire a virtual bookkeeper today!

In this blog, we tried to answer the age-old question about the most important financial statement in the context of the objective of perusing the statement. In an attempt to answer this question, we also took the opportunity to dig deeper into the aspects of the company that each statement brings out better than the other. The financial statements are not substitutes for one another; instead, they perform different functions.

If you want to build your remote team with our skilled virtual bookkeeping assistants, schedule a free consultation today, or send us a mail at [email protected]