Financial Statements

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Reading Consolidated Financial Statements

Most major corporations comprise numerous companies bought along the way to create their empires. The financial statement reflects the financial results for all the entities it bought as well as the original [more…]

Reading an Annual Report

Without a doubt, annual reports are at the pinnacle of corporate communication. The point of the annual report is to provide a summary of exactly how a company has performed in the preceding year, and [more…]

The Importance of a Financial Paper Trail

Accounting for a company's finances is all about creating an accurate paper trail. You want to track of all your company's financial transactions so if a question comes up at a later date, you can turn [more…]

Presenting Financial Reports: Turning Numbers into Information

Often, when the financial types get up and present a business's financial status, it seems like the lights got turned out and everyone went home. Even though you listen intently, it seems like they're [more…]

The Importance of Standardizing Business Source Documents

All business transactions require paperwork, called source documents. Business source documents, which are important to bookkeeping, need to be standardized. With standardized source documents, your bookkeeper [more…]

How to Read an Income Statement

Some aspects of income statements may seem obvious, but other parts of income statements might leave you stumped. You need to identify the parts of an income statement and to know what they mean before [more…]

Reasons to Report Extraordinary Gains and Losses on Your Income Statement

Many businesses report unusual, extraordinary gains and losses on their income statements. If your business has extraordinary gains and losses to report, your business's income statement is divided into [more…]

What You Put in a Business Balance Sheet

A balance sheet is the financial condition of your business at an instant in time. In your business balance sheet, you must put financial information that's in constant motion because the activities of [more…]

How to Read a Business Balance Sheet

When you read through your business's balance sheet, like the balance sheet shown in this figure, you may notice that it doesn’t have a "punch line" like the income statement does. You can’t look at just [more…]

The Differences between Internal and External Business Balance Sheets

Balance sheets, statements of a business's financial condition, are prepared for internal and external use. External balance sheets and internal balance sheets are intended for different audiences and [more…]

How to Judge Solvency on a Balance Sheet

Solvency refers to the ability of a business to pay its liabilities on time. Your business needs to remain solvent because delays in paying liabilities on time can cause you very serious problems. In extreme [more…]

How to Read an Auditor's Report

Your business's financial statement audit report can give your business a clean bill of health, or the auditor's report may state that your financial statements are misleading and should not be relied [more…]

The Purpose of Financial Reporting

Financial reports are the documents and records you put together to track and review how much money your business is making (or not). The purpose of financial reporting is to deliver this information to [more…]

Including Adequate Disclosures in Your Financial Report

A financial report needs to include disclosures of important financial information about the business, as well as financial statements. The term disclosures [more…]

Six Things in an Annual Report Necessary for Fundamental Analysis

After a huge annual report arrives in the mail, you may not know where to begin. So here are six things you should always consider when you get an annual report to make sure you are picking up the key [more…]

Connections between Profit & Loss Statement and Balance Sheet Accounts

We make remembering accounting rules and connections easy. The following list shows the connections between the Profit & Loss Statement and the balance sheet accounts. [more…]

Primary Financial Statements of a Business

This list gives details of the three primary financial statements in the running of a business. These statements record your business’s performance, letting you analyse and identify where you’re strong [more…]

Important Financial Documents for Your Small Business

Managing the finances of your small business can be a challenge. To survive and thrive, you must earn profit consistently, generate cash flow from profit, and control your financial condition. You need [more…]

Formulas and Functions for Financial Statements

As the business manager, you’re in control of your business’s accounting needs, so you need a strong understanding of the ins and outs of financial statements, including what goes on them and in what order [more…]

Overview of Annual Report Elements

Annual reports can be daunting, and you may be relieved to know you don’t actually need to scour every page of one. The following list gives you the big picture on annual reports, from a UK perspective [more…]

How to Make Sense of a Company's Profitability Ratios

When getting to grips with interpreting a company report, you can test a company’s stock market reputation and money-making prowess using the following important formulas. [more…]

How Liquidity Ratios Figure into Company Reports

If a company doesn’t have cash on hand to cover its day-to-day operations, it’s probably on shaky ground. Use the following formulas to find out whether a company has plenty of liquid [more…]

Accounting Details in Different Kinds of Financial Statements

The three key financial statements are the income statement, balance sheet, and statement of cash flows. All three record the same daily accounting transactions occurring in a business, but each presents [more…]

What Is an Income Statement for a Business?

Did your business make any money? You can find the answer in your income statement, the financial report that summarizes all the sales activities, costs of producing or buying the products or services [more…]

Understanding Costs and Other Balance Sheet Values

The values for assets and the costs reported in a balance sheet can be a source of confusion for both business managers and investors, who tend to put all dollar amounts on the same value basis. In their [more…]

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