Interpretation of Income Statement
6/23/2014
FINANCIAL STATEMENTS
The Hidden Road to Wealth
Learning Expection
Review accounting basics to understand the information on the financial statements
Appreciate the essence of the Financial
Statement
Understand the component of the
Income Statement and the Balance
Sheet
Determine how Income Statement and
Balance Sheet are use in making financial decision
1
6/23/2014
BASIC Terms
•
FINANCIAL STATEMENT represent a formal record of the financial activities of an entity. These are written reports that quantify the financial strength, performance and liquidity of a company. It reflect the financial effects of business transactions and events on the entity.
•
INCOME STATEMENT also known as the Profit and Loss Statement, reports the company's financial performance in terms of net profit or loss over a specified period.
•
BALANCE SHEET also known as the Statement of Financial Position, presents the net worth of an entity at a given date
See more at: http://accounting-simplified.com/financial/statements/types.html#sthash.yNCbgWJv.dpuf
REVIEW OF BASIC ACCOUNTING
The three definitions of ACCOUNTING
•
It is a service activity. it's function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions.
- ASC
•
Accounting is an art or recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof.
- AICPA
•
Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information.
- AAA
2
6/23/2014
REVIEW OF BASIC ACCOUNTING
ACCOUNT
Accounts are the categories into which the effects of transactions are recorded, and from which financial reports
are
FINANCIAL STATEMENTS
The Hidden Road to Wealth
Learning Expection
Review accounting basics to understand the information on the financial statements
Appreciate the essence of the Financial
Statement
Understand the component of the
Income Statement and the Balance
Sheet
Determine how Income Statement and
Balance Sheet are use in making financial decision
1
6/23/2014
BASIC Terms
•
FINANCIAL STATEMENT represent a formal record of the financial activities of an entity. These are written reports that quantify the financial strength, performance and liquidity of a company. It reflect the financial effects of business transactions and events on the entity.
•
INCOME STATEMENT also known as the Profit and Loss Statement, reports the company's financial performance in terms of net profit or loss over a specified period.
•
BALANCE SHEET also known as the Statement of Financial Position, presents the net worth of an entity at a given date
See more at: http://accounting-simplified.com/financial/statements/types.html#sthash.yNCbgWJv.dpuf
REVIEW OF BASIC ACCOUNTING
The three definitions of ACCOUNTING
•
It is a service activity. it's function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions.
- ASC
•
Accounting is an art or recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof.
- AICPA
•
Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information.
- AAA
2
6/23/2014
REVIEW OF BASIC ACCOUNTING
ACCOUNT
Accounts are the categories into which the effects of transactions are recorded, and from which financial reports
are