Accounting is a skill every individual should be aware of, no matter what the profession. You do not have to know everything. However, understanding the basic concepts, and terminologies of accounting will prepare you to understand how business financials work. For example, let us say a small business owner had to review an income statement prepared by his accountant.  The business owner may end up wondering how come the sales are higher than the actual cash he received? understanding the accrual concept can make significant difference in improving your ability to learn accounting. My aim ...Read More

The components of income statements line items makes analysing business performance more organised. The income statement measures the business performance of its income and expense for a specific time period.   Generally, the income statement is separated into two parts which are operating, and non-operating related. We will discuss the common line items under each of these sections. You may not find  the word “operating” and “non-operating” in an income statement explicitly all the time.But it is good practice to think about it that way. Because then when analysing the components of income statements you ...Read More

Companies use the balance sheet to keep track of their net worth. The balance sheet is a snapshot of the company sources of the money and how they used the money. Its components are Assets, Liabilities and Owner’s Equity. below is the formula that represent the balance sheet. Assets (uses) = Liabilities + Equity (sources)     The balance sheet should always be balanced where the uses (which is what the company own) and the sources (which is from where they get money from) has to be equal.   Why is the Balance Sheet Important? ...Read More

To keep the financial aspect of our life under control, we have to keep track of our financial transactions. When it comes to business, the financial statements are the standard way to record and track your financial situation, performance, and money decisions. The main types of financial statements are the income statement, the balance sheet and the cash flow statement which are the three main statements required to be prepared by any business. To keep it short, balance sheet is used to record your financial position/situation. The Income statement presents your business performance. And cash ...Read More