Financial Accounting Summary
Financial Accounting Summary
Financial Accounting – Summary Notes
Financial Accounting – Summary Notes 1
Financial Statement Basics 3
Understanding of the 3 financial statements – (balance sheet, income statement and statement of cash flows). What does each financial statement represent? 3
What is the structure of each statement? 3
What is the link between the three statements? 4
Understanding of the basic mechanics of financial accounting – (debits, credits, transaction journal entries, adjusting entries, closing entries, t-accounts, trial balances and financial statements) 4
Balance sheet 6
How are assets and liabilities valued on the balance sheet? 6
What are the components of stockholders’ equity section? 6
How is US GAAP different from other countries? 6
Income Statement 8
What is the difference between cash and accrual accounting? 8
When do I record revenues under accrual accounting? 8
When I record revenue should I record other things as well? 8
When do I record expenses under accrual accounting? 8
When do I record asset impairment charges under accrual accounting? 9
When do I record restructuring charges under accrual accounting? 10
Statement of cash flows 12
What is the purpose of this statement? 12
What is the format of the statement? 12
What sections does it contain? Where do certain items go on the statement? 12
Structure of cash flow statement 12
How does US GAAP differ from other GAAP? 13
How do I reconcile net income to operating cash flows? What is the intuition behind each adjustment? 13
Analyze companies based on their statement of cash flows 14
Ambiguities in Classifying Cash Flows 16
Revenue Recognition 18
Revenue & Expenses vs. Gains & Losses 18
Earned / Realized or Realizable? 18
Revenue recognition at time of sale 18
Income recognition at times different from sale 19
If I record the revenues, should I record other items as well? 19
“Profits you can trust”, chapter 3 – Revenue recognition 19
Inventory Accounting 21
What is inventory? And
Financial Accounting – Summary Notes
Financial Accounting – Summary Notes 1
Financial Statement Basics 3
Understanding of the 3 financial statements – (balance sheet, income statement and statement of cash flows). What does each financial statement represent? 3
What is the structure of each statement? 3
What is the link between the three statements? 4
Understanding of the basic mechanics of financial accounting – (debits, credits, transaction journal entries, adjusting entries, closing entries, t-accounts, trial balances and financial statements) 4
Balance sheet 6
How are assets and liabilities valued on the balance sheet? 6
What are the components of stockholders’ equity section? 6
How is US GAAP different from other countries? 6
Income Statement 8
What is the difference between cash and accrual accounting? 8
When do I record revenues under accrual accounting? 8
When I record revenue should I record other things as well? 8
When do I record expenses under accrual accounting? 8
When do I record asset impairment charges under accrual accounting? 9
When do I record restructuring charges under accrual accounting? 10
Statement of cash flows 12
What is the purpose of this statement? 12
What is the format of the statement? 12
What sections does it contain? Where do certain items go on the statement? 12
Structure of cash flow statement 12
How does US GAAP differ from other GAAP? 13
How do I reconcile net income to operating cash flows? What is the intuition behind each adjustment? 13
Analyze companies based on their statement of cash flows 14
Ambiguities in Classifying Cash Flows 16
Revenue Recognition 18
Revenue & Expenses vs. Gains & Losses 18
Earned / Realized or Realizable? 18
Revenue recognition at time of sale 18
Income recognition at times different from sale 19
If I record the revenues, should I record other items as well? 19
“Profits you can trust”, chapter 3 – Revenue recognition 19
Inventory Accounting 21
What is inventory? And