The primary financial statements of for-profit businesses include the balance sheet, income statement, statement of cash flow, and statement of changes in equity. Nonprofit entities use a similar set of financial statements, though they have different names and communicate slightly different information.
The major elements of the financial statements (i.e., assets, liabilities, fund balance/net assets, revenues, expenditures, and expenses) are discussed below, including the proper accounting treatments and disclosure requirements.
The 5 primary account categories are assets, liabilities, equity, expenses, and income (revenue) Once you understand how debits and credits affect the above accounts, it's easier to determine where to place your sub-accounts.
What are the five methods of financial statement analysis? There are five commonplace approaches to financial statement analysis: horizontal analysis, vertical analysis, ratio analysis, trend analysis and cost-volume profit analysis. Each technique allows the building of a more detailed and nuanced financial profile.
The five key documents include your profit and loss statement, balance sheet, cash-flow statement, tax return, and aging reports.
The five components of financial analysis are liquidity analysis, solvency analysis, profitability analysis, efficiency analysis, and market analysis. These components help assess an organization's financial health, performance, and viability from different perspectives.
There are five main account type categories that all transactions can fall into on a standard COA. These are asset accounts, liability accounts, equity accounts, revenue accounts, and expense accounts. These categories are universal to all businesses.
The five key steps in the financial reporting process are: 1) Identify financial transactions (e.g., sales), 2) Record transactions in journals (e.g., sales journal), 3) Post to ledgers (e.g., general ledger), 4) Prepare trial balance, and 5) Generate financial statements (e.g., income statement, balance sheet).
The three golden rules of accounting are (1) debit all expenses and losses, credit all incomes and gains, (2) debit the receiver, credit the giver, and (3) debit what comes in, credit what goes out. These rules are the basis of double-entry accounting, first attributed to Luca Pacioli.
There are five elements of a financial statement: Assets, Liabilities, Equity, Income, and Expenses.
Generally accepted accounting principles (GAAP) comprise a set of accounting rules and procedures used in standardized financial reporting practices.
Step 5: Finalize and analyze the income statement
When you're done with collecting all revenue, COGS, and operating expenses figures listed, you're ready to finalize your income statement. Key items to summarize include: Gross Profit: Revenue minus COGS. Operating Profit: Gross profit minus operating expenses.
Although the guidelines for accountants are extensive, there are five main principles that underpin accounting practices and the preparation of financial statements. These are the accrual principle, the matching principle, the historic cost principle, the conservatism principle and the principle of substance over form.
We all now know it as the big four, but actually it was the big 5. Arthur Andersen was once a symbol of excellence in the accounting profession, standing tall among the prestigious "Big Five" firms alongside PwC, Deloitte, EY, and KPMG.
They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders' equity. Balance sheets show what a company owns and what it owes at a fixed point in time. Income statements show how much money a company made and spent over a period of time.
The Big Four consist of PricewaterhouseCoopers (PwC), Deloitte, Ernst & Young (EY), and KPMG. These companies are the four largest accounting and audit firms worldwide. In 2024, they brought in more than 212 billion U.S. dollars in global combined revenue. Out of the four, Deloitte had the highest number of employees.