The Five Key Concepts of Accounting for Investor

Transcript

1. The Five Key Concepts of Accounting for Investor By Puah Soon Lim,CFA
2. Disclaimers This workshop is for educational purpose ONLY
3. –Warren Buffett “ Y o u h a v e t o u n d e r s t a n d accounting and you have to understand the nuances of accounting. It’s the language of business and it’s an imperfect language, but unless you are willing to put in the effort to learn accounting – how to read and interpret financial statements – you really shouldn’t select stocks yourself”
4. Accrual Realization Matching Capital Going Concern Period Historical Cost Conservatism Materiality Entity Balance Sheet Income Statement Cash Statement Cost Dual Aspect
5. Entity Going Concern What is a business?
6. What is a Business?
7. Business $ $
8. Business The 3 Elements $
9. Accounting is keeping track of $
10. Income Statement $ Always move in opposite direction
11. What is a Customer? A $ Multiplier $ $
12. Capital
13. Anything of Value to the Business
14. Accrual Matching Materiality Realisation Recognition
15. Cash Vs Accrual
16. BALANCE SHEET PROFIT & LOSS INCOME EXPENSES CASH FLOW INFLOW OUTFLOW
17. BALANCE SHEET PROFIT & LOSS INCOME EXPENSES CASH FLOW INFLOW OUTFLOW
18. Accrual Accounting OWE EARN
19. DEPRECIATION Week 52 Week 1
20. BALANCE SHEET PROFIT & LOSS CASH FLOW
21. Accrual Accounting USE OWE EARN
22. BALANCE SHEET PROFIT & LOSS Working Capital Assets lender Owner Angel LOAN CAPITAL Building Plant & Equip Vehicle INCOME EXPENSES CASH FLOW INFLOW OUTFLOW
23. –Warren Buffett “ Y o u h a v e t o u n d e r s t a n d accounting and you have to understand the nuances of accounting. It’s the language of business and it’s an imperfect language, but unless you are willing to put in the effort to learn accounting – how to read and interpret financial statements – you really shouldn’t select stocks yourself”