Financial Statements

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The Financial Reporting Benefits and Disadvantages of Public Companies

A company that offers shares of stock on the open market is a public company, and will have different financial reporting requirements than a private company [more…]

What Kind of Financial Statements Do Public Companies Have to File?

Public companies must file an unending stream of financial reports with the SEC. They must file financial reports quarterly as well as annually. They also must file reports after specific events, such [more…]

The Financial Reporting Implications of Taking a Private Company Public

So the owners of a company have finally decided to sell the company's stock publicly. What does that mean for your financial reports? You will want to know the role of an investment banker in helping a [more…]

Accounting Methods and Why They Matter for Your Financial Reports

Officially, two types of accounting methods dictate how a company records its transactions in its financial books: cash-basis accounting and accrual accounting. The key difference between the two types [more…]

How Debits and Credits Impact Your Financial Reports

For the purpose of financial reporting, you probably think of the word debit as a reduction in your cash. Most nonaccountants see debits only when they're taken out of their banking account. Credits likely [more…]

How to Use Depreciation and Amortization for Your Financial Reports

Depreciation and amortization are accounting methods you use to track the use of an asset on your financial reports and record its value as it ages. Tangible assets [more…]

The Chart of Accounts and Your Company’s Financial Reports

A company groups the accounts it uses to develop the financial statements in the Chart of Accounts, which is a listing of all open accounts that the accounting department can use to record transactions [more…]

How to Read Asset Accounts for Financial Reporting

Asset accounts come first in the Chart of Accounts, with the most current accounts (ones that the company will use in less than 12 months) listed before the long-term accounts [more…]

How to Read Liability Accounts for Financial Reporting

It is important for you to understand how to read your company’s liability accounts in the Chart of Accounts. Money a company owes to creditors, vendors, suppliers, contractors, employees, government entities [more…]

How to Read Equity Accounts for Financial Reporting

Equity accounts reflect the portion of the assets on financial reports that isn't subject to liabilities and is therefore owned by a company's shareholders. If the company isn't incorporated, the ownership [more…]

How to Read Revenue Accounts for Financial Reporting

At the top of every income statement on financial reports is the revenue the company brings in. This revenue is offset by any costs directly related to it. The top section of the income statement includes [more…]

How to Read Expense Accounts for Financial Reporting

Any costs on the financial statements not directly related to generating revenue are considered expenses. Expenses fall into four categories: operating, interest, depreciation or amortization, and taxes [more…]

How to Read Financial Reports for Profit Types

A company doesn't actually make different kinds of profits, but it has different ways to track a profit on financial reports and compare its results with similar companies. The three key profit types are [more…]

How to Read the Management’s Discussion and Analysis on the Annual Financial Report

The management's discussion and analysis (MD&A) section is one of the most important sections of an annual report. The MD&A may not be the most fun section to look at, but in it you find the key discussions [more…]

How to Read Guarantees from Management on the Annual Financial Report

Management has been required to include a section in the annual financial report called “Corporate Responsibility for Financial Reports” or “Management's Responsibility for Financial Reports” since the [more…]

How to Read the Auditor’s Report on the Annual Financial Report

Any publicly traded company must provide financial reports that outside auditors have examined. You usually find the auditors’ report (a letter from the auditors to the company's board of directors and [more…]

How to Read the Financial Statements on the Annual Report

The main course of any annual report is the financial statements. In this part, you find out what the company owns, what the company owes, how much revenue it took in, what expenses it paid out, and how [more…]

How to Read Summaries on the Annual Financial Report

Knowing that most people won't spend the time to read all the way through the annual financial report, many companies summarize their numbers in various ways. The two most common ways to summarize are [more…]

How to Read the Balance Sheet for Financial Reporting

Trying to read a balance sheet without having a grasp of its parts on a financial report is a little like trying to translate a language you've never spoken — you may recognize the letters, but the words [more…]

Financial Reports: How to Read the Balance Sheet for Cash

For companies, cash is basically the same as what you keep in your checking and savings accounts. Keeping track of the money on financial reports is a lot more complex for companies, however, because they [more…]

Financial Reports: How to Read the Balance Sheet for Accounts Receivable

Any company that allows its customers to buy on credit has an accounts receivable line on its balance sheet. On a financial report, accounts receivable [more…]

Financial Reports: How to Read the Balance Sheet for Marketable Securities

Marketable securities are a type of liquid asset on the balance sheet of a financial report, meaning they can easily be converted to cash. They include holdings such as stocks, bonds, and other securities [more…]

Financial Reports: How to Read the Balance Sheet for Inventory

Any products a company holds ready for sale are considered inventory. The inventory on the balance sheet is valued at the cost to the company, not at the price the company hopes to sell the product for [more…]

Financial Reports: How to Read the Balance Sheet for Long-Term Assets

Assets that a company plans to hold for more than one year belong in the long-term assets section of the balance sheet. For financial reporting, this section shows you the assets that a company has to [more…]

Financial Reports: How to Read the Balance Sheet for Accumulated Depreciation

On a balance sheet, you may see numerous line items that start with accumulated depreciation. On the financial report, these line items appear under the type of asset whose value is being depreciated or [more…]

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