Financial Statements

Conclusion

We’ve come a long way. Our fears of both accounting and financial reporting have melted away. We’ve learned the vocabulary; we’ve learned the structure. We know what FASB means and we appreciate the importance of GAAP.

We understand:

• That accrual has nothing to do with the Wicked Witch of the West. (pages 58–59)

• When negative cash flow is a sign of good things happening and when it is a sign of impending catastrophe. (page 195)

• Why discounts “drop” directly to the bottom line. (page 157)

• The important difference between liquidity and profitably. (pages 194–195)

• Those expenditures that are costs and those that are expenses. (page 50)

• Depreciation’s differing effect on income and on cash. (pages 118–119)

• Why product cost ...