By Bonita Kramer, Christie Johnson

ISBN-10: 0071543872

ISBN-13: 9780071543873

ISBN-10: 0071543880

ISBN-13: 9780071543880

QUESTIONS approximately STATEMENTS? locate all of the solutions Here!

Are you contemplating procuring a small company? do you need to speculate in a Fortune 500 corporation? Are you attempting to promote your individual company? stability sheets and source of revenue statements are necessary to aiding you're making expert judgements relating to vital enterprise transactions. yet until you are an accountant, those records should be intimidating hodgepodges of columns, rows, and numbers. don't worry. Financial Statements Demystified is simply the instrument you would like.

Devoid of complicated company jargon, this enticing and easy-to-follow advisor defines uncomplicated financial plan terminology and explains the parts of the 4 most typical monetary statements: source of revenue assertion, stability Sheet, assertion of Stockholders' fairness, and assertion of money Flows. you'll how to learn, interpret, and use pivotal facts from those sources--each of so one can assist you make actual monetary judgements with no need to return to school.

This confusion-busting consultant covers:

  • An assessment of economic statements--what they're and what they let us know
  • Easy-to-understand reasons of revenue and loss
  • Statement of money flows and targeted reporting matters
  • How to identify fraudulently misstated monetary statements
  • Quizzes on the finish of every bankruptcy to assist attempt your knowledge

Simple adequate for a beginner yet in-depth sufficient for a professional investor, Financial Statements Demystified may help you recognize the 4 major monetary statements.

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Can be verified b. Is neutral c. Is free from errors d. All of the above 3. The business entity assumption requires that the owner’s personal assets and liabilities must be included on the business’s financial statements. a. True b. False 28 Financial Statements Demystified 4. The monetary unit assumption: a. Recognizes that the value of a dollar changes over time b. Requires that financial statements be restated to show the effects of inflation c. Means that only transactions and events that can be measured in terms of money are reported on financial statements d.

9 Examples of Operating Expenses OPERATING EXPENSES • Salaries and wages • Employer payroll taxes • Pension and retirement • Depreciation • Rent • Utilities • Supplies • Uncollectible accounts • Property taxes • Telephone • Postage • Insurance • Repairs and maintenance • Advertising Where do the owner’s personal expenses belong? According to the business entity assumption, personal expenses of the owners that were paid by the business are not included in the income statement but instead are shown in the statement of owner’s equity as withdrawals.

4 Net Income Calculation under the Accrual Basis of Accounting versus the Cash Basis of Accounting Services revenue Wages expense Net income (loss) Accrual Basis of Accounting Cash Basis of Accounting $100,000 $40,000 65,000 $ 35,000 60,000 ($20,000) Financial Statements Demystified 26 Notice that under the accrual basis of accounting the company has generated a profit of $35,000 in its first year of operations, whereas under the cash basis of accounting the company appears to be having problems since it suffered a loss of $20,000.

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Financial statements demystified : a self-teaching guide by Bonita Kramer, Christie Johnson


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