
Accounting process in security analysis
Analyst see only financial statement Need to understand accruals, adjustment, management assumption Contained in the footnotes → crucial to review Contained in Management’s Discussion and …
Analyst see only financial statement Need to understand accruals, adjustment, management assumption Contained in the footnotes → crucial to review Contained in Management’s Discussion and …
Journal entries (25): Record any transaction showing which accounts are changed and by what amount General journal (26) Listing of all journal entries General ledger …
Balance sheet Financial position at the end of the current accounting period Income statement, cash flow statement, statement of owner’s equity Change that occurred during …
Accrual accounting (19) Revenues and expense are recorded when it occurs Types of accruals: Unearned revenue (20): receive cash before providing good or service Cash …
One transaction – 2 accounts Double-entry accounting (18) A transaction has to be recorded in at least two accounts Exp: increase in asset account must …
Basic accounting equation (16) Assets = liabilities + owner’s equity Expanded accounting equation (17) Assets = liabilities + contributed capital + ending retained earnings = …
5 classes: Asset Liability Equity Revenue Expense Assets: company’s economic resource Cash and cash equivalent Accounts receivable: have “allowance for bad debt” as contra accounts …
Accounts are elements of financial statement Financial statement elements (4) Major classification Assets Liabilities Owner’s equity Revenue Expense Account (5) Account is record within each …
Business activities are classified as: Operating activities (1) Ordinary course of business (producing, selling goods) short-term Investing activities (2) Buying or selling long-term asset such …
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