Dolly was keeping records manually and had several files stored in the back office regarding how much to purchase from the grocery store. She was charging 50 cents per cupcake but she wasn't sure if she was really making money as this was her passion for she loved to bake. You accepted the job and after being at the cupcake shop for a week realizes that poor Dolly was so busy with the customers and their children, many of the records she kept were in these small folders labeled as purchases from grocery store, cash register receipts, and store rent. Several customers had come into the shop recently and asked if she accepted their credit cards. She wasn't set up for this feature but thought it might make sense. Since the start-up of Dolly’s business, no financial statements had been prepared, but she monitors her checking account. She is unsure whether she needs to have financial statements prepared and asks your opinion.

Write a memo describing each of the major financial statements and the elements they contain. Additionally, indicate the reasons why Dolly should be reviewing monthly financials.