If you use a Money account register to record your income and expenses, measuring profits is very easy. All you need to do is prepare a report that summarizes your in- come and expenses.
Several of these reports, in- cluding the Monthly Cash Flow report and the Category Spending report (the third and fourth reports listed) let you summarize your profits.

If you choose the Monthly Cash Flow report, for example, Money produces a report. This report summarizes your transactions by
income and expense categories. The net difference between your income and expense represents your cash profits.

One important point to consider when you produce a profit statement is the accounting period. Typically, you want to produce reports that measure profits on a monthly basis, perhaps on a quarterly basis, and on an annual basis. The trick is to pick an accounting period that includes enough income and expense data to fairly and mean- ingfully summarize a time interval of business activity.

An extreme example shows what we mean. You probably don't want to produce daily profit statements because they don't contain enough information to be meaningful. The fact that you don't write a check one day doesn't really mean that you didn't incur expenses. And the fact that you did or didn't receive a deposit one day doesn't mean that the day is particularly good or bad.
In general, longer accounting periods, (months, quarters, or even years) are better than shorter ones, such as days or weeks. Professional accountants typically prepare profit and loss statements on a monthly and annual basis.

How do I measure cash flow?

Because Money forces you to use cash flow accounting, a business profit and loss state- ment is essentially equivalent to a cash flow statement. This means that to produce a cash flow statement you follow the same sequence of steps as you would to produce a profit and loss statement.

NOTE The Date Range box at the bottom of the Pick A Report Or Chart window lists a series of common date ranges. Date ranges, in effect, identify the account- ing periods you will use as a basis for preparing profit and loss and cash reports.

How do I prepare a balance sheet?

The What I Have and What I Owe groups of Money reports let you prepare a good list of account balances. These account balances, in combination, amount to a balance sheet. A balance sheet is a summary of what a business owns and what it owes.
The first report listed-the Net Worth report-amounts to a business balance
sheet.
One common accounting convention is to prepare a balance sheet for the last day of the profit measurement or accounting. In other words, if you prepare a profit and loss statement, or a cash flow statement, for the month of December, you would typically also prepare a balance sheet for December 31.
The Net Worth report prepares a balance sheet for the current system date. However, you can easily change the date used to prepare the report. To do this, first prepare the report in the usual way. When Money displays the report, right-click the As Of Date field and then choose Change Date from the shortcut menu. Use the Change Date dialog box to pick the date you want.