Many small business owners who did not take accounting classes in college are stumped by managing their finances. Even if you hire a qualified accountant and bookkeeper, you will still need to know how to read and interpret the reports and statements they provide to you. What is a balance sheet, and what does it show me about my business? What statistics do shareholders need to know? How can I make the most of my cash flow? These are all valid concerns, and you deserve simple, easy to understand answers.
Author(s): Lawrence, Simon J.
Publisher: Lost River Publishing House
Year: 2020
Language: English
Pages: 82
Tags: Guide to Understanding Financial Statements
Introduction
Chapter 1: Accounting and Bookkeeping Principles
Defining Terminology
What are Accounting and Bookkeeping
Duties of a Bookkeeper vs. an Accountant
Key Accounting and Bookkeeping Principles
Economic Entity Assumption
Monetary Unit Assumption
Specific Time Period Assumption
Cost Principle
Full Disclosure Principle
Going Concern Principle
Matching Principle
Revenue Recognition Principle
Materiality Principle
Conservatism Principle
Chapter 2: Introduction to Financial Statements
What are Financial Statements?
Using Financial Statement Information
Balance Sheets
Income Statements
Classifying Revenue and Expenses
The Cash Flow Statement
Investing Activities
Financing Activities
Statement of Owner's Equity
Why Financial Statements are Important
Who Needs to See Financial Statements?
Chapter 3: Preparation and Interpreting Financial Statements
Preparing and Interpreting the Trial Balance
Benefits of the Trial Balance
Shortcomings of the Trial Balance
Preparing and Interpreting the Income Statement
Step 1: Calculate the Gross Profit
Step 2: Calculate Earnings Before Interest and Taxes(EBIT)
Step 3: Calculate the Earnings Before Tax (EBT)
Step 4: Calculate the Net Income
Preparing and Interpreting the Balance Sheet
Step1: Determine the Reporting Date and Period
Step 2: Identify Your Assets
Step 3. Identify Your Liabilities
Step 4: Calculate Shareholders’ Equity
Step 5: Compare the sum of Assets with that of Liabilities and Owner's Equity
Preparing and Interpreting the Statement of Cash Flows
Step 1: Gather Cash Flows from Operations
Step 2: Calculate Cash Flow from Investing Activities
Step 3: Calculate Cash Flow from Financing Activities
Preparing and Interpreting the Statement of Owner's Equity
Chapter 4: What You Can Learn From Financial Statements
Learning from the Balance Sheet
Learning from the Income Statement
Learning from the Statement of Owner's Equity
Learning from the Statement of Cash Flow
Chapter 5: Precautions and Mistakes to Avoid
Mistakes Made by Amateur Accountants
Accounting Basics You Should Never Forget
How to Detect Accounting Problems from Financial Statements
FAQs about Financial Statements
Conclusion
