Lecture 01- Introduction
Dr. Anil K Sharma from department of management studies, IIT, Roorkee, is
teaching a course on financial statement analysis and reporting. The course covers
three things: how to prepare financial statements, how to analyse financial
statements, and how to report financial statements.
I will discuss with you, how to prepare the financial statements for both type of
organizations - public and private firms. The profit and loss account, the balance
sheet, and the cash flow statement are the three financial statements that are
statutorily required in a day.
Because ultimate purpose of any business is to earn the profits and maximize it, we
will learn how to prepare three statements: balance sheet, trading and profit and loss
statement, and how to draw meaningful inference out of them.
GAAP is generally accepted accounting principles. In every country, there is a one
institute called Institute of Chartered Accountants of that country or Institute of
Certified Public Accountants in may be other country, which prepares the financial
statements and reports this financial information to the different stake holders in the
industry.
In India, we have ICAI - Institute of Chartered Accountants of India, which is tasked
with the task of preparing the generally accepted accounting principles (GAAP) and
ensuring the proper implementation of the GAAP. The GAAP is must to be known by
every person interested in the financial statements of the business.
Accounting helps us to know the means of finance, the asset composition of a firm,
the equity and debt position of the firm, and the overall profitability position of the
firm. We can use this information to prepare important financial statements and to
exercise control over the financial performance of a firm.
Accounting facilitates the recording, classification, summarizes and interprets
financial information so that intelligent decisions may be taken.
Different countries have different GAAPs, and they have specialized institutes.
American Institute of Certified Public Accountants says that accounting is an art of
recording, classifying, analyzing, and communicating economic information that is
financial information to permit informed judgments and decisions by the users of that
information.
Accounting is used in businesses to make decisions concerning use of limited
resources, and the ultimate objective of accounting is maximum and the best
utilization of this scarce resource. If you are an entrepreneur, you have to choose at
least one business in the beginning, and invest your resources in a business which
ensures the security of your funds and the growth of your funds.
Our first objective is to make important decisions, and with the help of accounting,
we achieve this objective. If you would like to start a business tomorrow, but do not
have enough money, you can go to the bank or the stock market to raise funds.
Dr. Anil K Sharma from department of management studies, IIT, Roorkee, is
teaching a course on financial statement analysis and reporting. The course covers
three things: how to prepare financial statements, how to analyse financial
statements, and how to report financial statements.
I will discuss with you, how to prepare the financial statements for both type of
organizations - public and private firms. The profit and loss account, the balance
sheet, and the cash flow statement are the three financial statements that are
statutorily required in a day.
Because ultimate purpose of any business is to earn the profits and maximize it, we
will learn how to prepare three statements: balance sheet, trading and profit and loss
statement, and how to draw meaningful inference out of them.
GAAP is generally accepted accounting principles. In every country, there is a one
institute called Institute of Chartered Accountants of that country or Institute of
Certified Public Accountants in may be other country, which prepares the financial
statements and reports this financial information to the different stake holders in the
industry.
In India, we have ICAI - Institute of Chartered Accountants of India, which is tasked
with the task of preparing the generally accepted accounting principles (GAAP) and
ensuring the proper implementation of the GAAP. The GAAP is must to be known by
every person interested in the financial statements of the business.
Accounting helps us to know the means of finance, the asset composition of a firm,
the equity and debt position of the firm, and the overall profitability position of the
firm. We can use this information to prepare important financial statements and to
exercise control over the financial performance of a firm.
Accounting facilitates the recording, classification, summarizes and interprets
financial information so that intelligent decisions may be taken.
Different countries have different GAAPs, and they have specialized institutes.
American Institute of Certified Public Accountants says that accounting is an art of
recording, classifying, analyzing, and communicating economic information that is
financial information to permit informed judgments and decisions by the users of that
information.
Accounting is used in businesses to make decisions concerning use of limited
resources, and the ultimate objective of accounting is maximum and the best
utilization of this scarce resource. If you are an entrepreneur, you have to choose at
least one business in the beginning, and invest your resources in a business which
ensures the security of your funds and the growth of your funds.
Our first objective is to make important decisions, and with the help of accounting,
we achieve this objective. If you would like to start a business tomorrow, but do not
have enough money, you can go to the bank or the stock market to raise funds.
