Finance & Accounting skills | For managers & professionals. Analyzing Financial Statements. This topic could be and is a full semester course at some business schools. It is a deep and rich topic that I can’t cover in one single blog post. But it is also a relatively narrow skill set at its most developed levels. If you are going to be a public equity analyst, you need to understand this stuff cold and this post will not get you there. But if you are an entrepreneur being handed financial statements from your bookkeeper or accountant or controller, then you need to be able to understand them and I’d like this post to help you do that. I’d also like this post help those of you who want to be more confident buying, holding, and selling public stocks. In the past three weeks, we talked about the three main financial statements, the Income Statement, the Balance Sheet, and the Cash Flow Statement.
In general, I like to start with cash. Then look at how much cash the business had in a prior period. If cash flow is positive for all periods, then you are done with cash. Record Keeping and the Accounting Process | Money Instructor. Accounting is a process-oriented task that follows a prescribed series of steps in order to keep track of, and record, the balances of the various accounts.
When a business makes a transaction, the effect of that transaction is recorded in the accounting system. According to the fundamental accounting equation, each transaction will affect at least two accounts and the balances in those accounts will change. Accounting is the process of keeping track of those changes and recording and then reporting them. The Accounting Process Transaction Example: On August 2, 2005 Tom’s Plumbing purchased a truck for $25,000 with a $5,000 cash deposit and a $20,000 bank loan.
The asset account “Truck”The asset account “Cash”The liability account “Bank Loan” These specific accounts can be found in what is called the Chart of Accounts. Chart of AccountsThe Chart of Account is list of all the accounts used by an entity to record financial transactions. Tom’s PlumbingChart of Accounts The General Journal. Accounting. 150 Free Online Business Courses. Find over 150 courses, many from leading universities, that will deepen your professional education. Topics include finance, technology, entrepreneurship and much more.
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