The Accounting Equation & Balance Sheet

In this section we shall examine the form, content, terms and conventional rules used in the presentation of financial information in published financial reports. The balance sheet and profit and loss account, and their relationship to cash flow will be discussed. Ratio analysis will be applied to assess the financial performance and status of a company from its published accounts in relation to short-term and long-term financial criteria. The form and content of the published annual report will also be examined.

It is not the aim of this site to turn you all into competent accountants, and it is therefore inappropriate to dwell on

the details of bookkeeping and the preparation of accounting statements more than is absolutely necessary to establish basic principles. The aim is to enable you to read, understand and analyse the published accounts of a company sufficiently well to be able to make informed judgements about the company's financial health. We shall therefore concentrate on real examples of the accounting statements produced by the sorts of company you are most likely to end up working for.