Search results
Results from the WOW.Com Content Network
The purpose of this whitepaper is to help readers develop an understanding of the basic contours of the three principal financial statements. The balance sheet, income statement, and statement of cash flows are each indispensable components of the “story” that the financial statements tell about a company.
UNDERSTANDING FINANCIAL STATEMENTS Financial statements provide the fundamental information that we use to analyze and answer valuation questions. It is important, therefore, that we understand the principles governing these statements by looking at four questions: • How valuable are the assets of a firm?
There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time. Income statements show how much money a company made and spent over a period of time. Cash
FINANCIAL STATEMENTS ARE A MIXTURE OF ART & SCIENCE. Accounting requires many judgments and estimations by management. Rules allow for significant variation in how to prepare and present results. It is critical to understand incentives of management and accountants. Not enough to just follow the rules.
Financial statements are written records that illustrates the business activities and the financial performance of a company. In most cases they are audited to ensure accuracy for tax, financing, or investing purposes.
Accounting Fundamentals Lesson 1. 1. The Financial Statements. Financial statements present the results of operations and the financial position of the company. Publicly traded companies commonly prepare four statements: Balance sheet, . Income statement, . Statement of cash flows and .
Chapter 2: Introduction to Financial Statements. Fundamental Question: Key =>. 2.1 Firm’s Disclosure of Financial Information. Key issues: => role of financial statements. => importance of GAAP. => role of auditors. => GAAP versus International Financial Reporting Standards.