Over the years I’ve seen a lot of companies come in my door with a mess for a set of books. Some with no books at all.
My wife once asked me, “How do these companies let it get to this point?” My answer simply put? They’re not accountants!
The question I am still surprised by is when people ask me, “How do you get excited about accounting?”
Isn’t it obvious? I like to make money! Money may not buy you happiness. It truly doesn’t. It’s a resource and one that provides comfort. With that comfort we can realize the freedom to seek the people and things anywhere on this planet that do truly make us happy.
My question is, “How can you not think the accounting is exciting?” Everyone wants to know how much money they made. They want to know how they can make more. The answers to these questions lies in understanding your financial statements taken as a whole. The Profit and Loss alone isn’t enough. You have to understand the Balance Sheet and without also including the Statement of Cash Flows the picture is incomplete.
In fact the Statement of Cash Flows in many respects acts as a filter for all of the “fluff’ that can be found in the P&L and Balance Sheet. In other words, I can manipulate a P&L and a Balance Sheet. I can’t fudge the statement of cash flows. By the time you finish our newest course you will understand clearly why this is true. The quick answer is that the Statement of Cash Flows eliminates all of the non-cash items that are included in net income and adds back all of the cash items that aren’t in net income. It’s a reconciliation from the accrual basis net income to the cash balance at the end of a period.
Most banks and investors will be much more interested in looking at the Statement Of Cash Flows than the P&L or Balance Sheet at the end of the day because it tells them where the cash flows are REALLY coming from; (ie) Operations, Financing, or Investing activities.
I hope those of you who are signed up will really enjoy the course; Understanding Your Financial Statements. I know you’ll get a lot out of it![wdca_ad id=”580″ ]
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