Final Review
Final Review
The objective of this tutorial was not to teach you how to prepare financial statements and analyses; but, to tell you what they look like, what they tell you, and how to use the information presented in the statements and analyses for managing your business. You use the "tools" presented in this tutorial as aids for determing the financial health of your business.
What We Covered
The first three lessons covered the basics of bookkeeping and accounting while the remaining lessons discuss the financial statements and how to read, understand, and use them.
Lesson 1 Introduction to Bookkeeping discussed the types of business organizations, types of business activities, users of financial information, bookkeeping systems, accounting rules, and the cash and accrual basis of accounting.
Lesson 2 Bookkeeping Language discussed the major types of accounts, detail accounts, and the chart of accounts which are the building blocks of any accounting system.
Lesson 3 Accounting Equation discussed the different versions of the equation and how they relate to the double entry bookkeeping system.
Note: Content for the first three lessons were "borrowed" from my Introductory Bookkeeping Tutorial -
Lesson 4 Financial Statements explained what financial statements are, how they’re created,and how they’re used.
Lesson 5 Horizontal, Vertical, and Common Size Analysis explained how to analyze financial statements using these methods.
Lesson 6 Ratios explained what ratios are, what they tell us, and how they are used to analyze financial information.
Lesson 7 Other Tools discussed aging reports, cash forecasts, and budgets and how they are used.
Learning Objectives
The objective of this tutorial was not to teach you how to prepare financial statements and analyses; but, tell you what they look like, what they tell you, and how to use the information presented in the statements and analyses for managing your business. if you know how great; but, if not your bookkeeper or accountant should prepare them for you.
Preparing Financial Statements and information is only half the battle. You need to use them ! This tutorial will show you how.
One of my visitors summed it up nicely with the following comment -" I am a tired and retired small business consultant. The biggest problem I faced was that business owners didn't understand anything about their accounting. The worst part is they were too embarrassed to admit it. Your work is some of the best I have seen to explain it simply and comprehensively. Even a professional could learn a thing or two by studying your work. Congratulations and continue the terrific work."
Business owners don't get all the blame. We bookkeepers and accountants sometimes don't take the time to not only deliver the financial statements; but,take the time to explain what the numbers mean.
After completing this course, you should know the following:
- General understanding of the types of business organizations, activities, bookkeeping systems, rules of the game, and who uses financial information.
- Definitions of at least the major accounting and bookkeeping terms.
- What the accounting equation represents.
- What financial statements are and how to read, understand, and use the financial information provided by these statements:
Balance Sheets
Income Statement
Capital Statement
Cash Flow Statement
- What horizontal, vertical, and common size analysis of financial statements are, what they tell us, and how they're used to analyze financial statements.
- What ratios are, what they tell us, and how they're used to analyze financial statements.
- What aging reports, cash forecasts, and budgets are, what they tell us, and how they're used.