How to make managerial accounting reports

Written by julia fuller
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How to make managerial accounting reports
Balance sheet. (,

Managers, owners and shareholders use managerial accounting reports to make decisions for current and future operations of a business. The current balance sheet, income statement and cash flow statement should be created automatically by the accounting staff. Managers may request other reports to help with business planning such as budgets, forecasts and comparison reports using numbers from previous periods.

Skill level:

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Things you need

  • Computer and printer
  • Accounting or spreadsheet software
  • Accounting records for periods specified

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  1. 1

    Prepare the balance sheet using the standard accounting equation, assets = liabilities + shareholder's equity. If you are using standard accounting software, you can print the balance sheet for the specified period. Otherwise, create a spreadsheet. Assets owned by the company go on the left side of the balance sheet and liabilities go on the right side. Underneath liabilities, put the shareholder's or owner's equity. Assets include the cash, accounts receivable, machinery, buildings, inventories and brand names, for example. Liabilities are debts incurred by the company both short-term and long-term. The difference between the assets and liabilities is the owner's or shareholder's equity, also known as capital or net worth.

  2. 2

    Create the income statement for the same accounting period as the balance sheet. The income statement reports the company's income, expenses and profits for the given period. Begin with total gross revenues; subtract returns, allowances and discounts to arrive at net revenues for the specific reporting period. Under net revenues, you subtract cost of sales to arrive at gross profit. Next, subtract selling, general and administrative expenses to arrive at operating income. Subtract your allowance for taxes and arrive at net income.

    How to make managerial accounting reports
  3. 3

    Print the cash flow statement. Begin with the net earnings and then add or subtract items that affect the cash total, but are not really cash expenses. Examples are depreciation expense, changes from one balance sheet to another in accounts receivable, accounts payable, inventory and taxes. This results in net cash flow from operations. Next, adjust cash flow for changes in assets, equipment or investments. Finally, adjust cash flow for changes in financing that affected cash during the period to arrive at cash flow for the financial year or accounting period.

  4. 4

    Include footnotes on the reports for any relevant information used to create the reports, or that would affect managerial or shareholder's understanding. Examples include leasing cost not reflected on the balance sheet, current and deferred income taxes, pension and retirement plans, and stock options granted to employees and officers.

  5. 5

    Present all three reports together to managers along with the reports from previous accounting periods for comparison. You may want to print separate comparison reports with numbers side-by-side for the current year and previous year or period. Include a column for percentages to add significance to the changes in dollar figures.

Tips and warnings

  • Ask managers what trends or goals they want to look at and provide reports, documentation and explanations when possible to accommodate them.
  • Follow GAAP, Generally Accepted Accounting Principles, when producing accounting reports to avoid liability issues.

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