Basic Financial Statements
Overview and Objectives
Financial statements are necessary sources of information about companies for a wide variety of users. Those who use financial statement information include company management teams, investors, creditors, governmental oversight agencies and the Internal Revenue Service.
Users of financial statement information do not necessarily need to know everything about accounting to use the information in basic statements. However, to effectively use financial statement information, it is helpful to know a few simple concepts and to be familiar with some of the fundamental characteristics of basic financial statements.
On completion of this overview, you should be able to:
- Understand the accounting equation
- Know the implications of double entry accounting
- Distinguish between debits and credits
- Understand what a balance sheet illustrates about a company
- Know how an income statement is put together