Some of the key points I have learned on financial accounting are:
1. Income Statement; this is a statement that shows a company’s revenue, expenses and profit or loss over a period of time. It can also be called profit or loss statement.
2. Owner’s equity; this is what is remaining for an owner after liabilities are separated.
3. Assets; a financial statement component that means what a company owns as its own which is expected to have a good future economic benefit.
4. Liabilities; they are those things owned by a company but doesn’t have much economic value in the future.
5. Revenue; this refers to as the total funds generated after a transaction.
6. Expenses; an amount of money spent for a business transaction or to keep a business running. Some are fixed and others reoccurring.
7. Balance sheet; it is a summary of activities of a company at a particular point in time.
8. Investor; this means someone who puts his funds in a business for a favourable return while being conscious of the risk.
9. Financing; means funds put into an investment. It could be debt financing or equity financing.
10. Accounts; a record of financial expenses and income that helps evaluate loss or gain.
11. Vertical analysis; a financial analysis of one year
12. Horizontal analysis; an analysis of two years
13. Trend percentage; financial analysis of more than two years and is usually plotted on a graph.
14.Common sized statement; financial statement that shows only percentage.
15. Financial statement analysis; the tearing apart of a financial statement and looking at the relationships to assist us in making good decisions
#MMBA4
