The Layman’s Guide to Understanding Financial Statements: How to Read, Analyze, Create & Understand Balance Sheets, Income Statements, Cash Flow & More

by Simon J. Lawrence

Many small business owners who did not take accounting classes in college are stumped by managing their finances. Even if you hire a qualified accountant and bookkeeper, you will still need to know how to read and interpret the reports and statements they provide to you. What is a balance sheet, and what does it show me about my business? What statistics do shareholders need to know? How can I make the most of my cash flow? These are all valid concerns, and you deserve simple, easy to understand answers.

In my book, The Layman’s Guide to Understanding Financial Statements, I will teach you all about what you need to know to read, analyze, create, and understand various financial statements. To be a competent and successful business owner, you will need to know what to do with these forms and how best to utilize them for your business’s financial health.

If you are a business owner or manager, this book will help you handle your duties effectively. This book may also be used by accounting students who wish to sharpen their practical accounting skills. From the start to the end, we use a practical approach to elaborating on every aspect of financial statements. We have used examples, images, and screenshots to help you conceptualize how all the statements are prepared.

To help you understand financial statements and even prepare them, we have simplified this book. You should not expect technical accounting terms or calculations within the book. The book breaks accounting in simple small chunks that are easy to understand for all.

In this book, we have covered four main sections. The introductory section mainly focuses on new terms you will encounter in the book. To help you understand the book well, we look at some accounting terms and explain them in the simplest way possible.

In the second section of the book, we introduce you to financial statements. Before you start preparing any financial statements, you should know what they are. The book gives you a snippet of each of the important financial statements. We look at what each financial statement is used for and how important it is to the business. We also have a look at the general use of each financial statement and help you understand the benefits of each statement to your business.

In the third section of the book, we focus on the preparation and analysis of financial statements. This section forms the core of the book and provides a detailed look at how financial statements are arrived at. For each of the financial statements, we provide the easiest ways of preparation and analysis. We introduce you to financial ratios that are used to analyze financial statements too.

Lastly, we look at the mistakes that could occur in accounting. As a manager or the owner of a business, you should always be on the lookout to avoid making mistakes. You should also be keen to detect any errors that may occur within financial statements. In the last section of the book, we look at some precautions you could take to seal loopholes. Most accountants and bookkeepers look for loopholes to steal the resources of the business. You must put in place regulations that can control leakage of company resources. We look at how you can spot errors within financial statements and try to resolve them before they develop into a full-blown financial crisis.

Be sure to click “Buy Now” to add this title to your business analytics reference library so you can be a better, more informed business owner.

Genres: Accounting

105 pages, Kindle Edition

Published September 28, 2020

Reviews

[Abdullah Almuslem · Rating 3 out of 5]

I found this book to be quite basic, covering only fundamental aspects of financial statements

[Slmarie · Rating 4 out of 5]

A one-stop-shop to financial management

Presented simply and in straightforward fashion, The Layman’s Guide To Understanding Financial Statements: How To Read, Analyze, Create & Understand Balance Sheets, Income Statements, Cash Flow & More delivers financial management savvy to readers as promised in its title. Readers are reminded early on in the introduction how extensive the topics covered in this book can be and may stand assured knowing that they have in their hands a robust guide to the key areas of accounting together in one place. The book comforts readers in expressing that it is not necessary to be or to hire an accountant in order to make sense or even to prepare financial statements. It also makes it clear that investing energy into financial management is ideal for maintaining a thriving and productive business model. It allows readers the option to determine at what extent they wish to interact within the fiscal side of their business, and at the very least offers readers with an in-depth knowledge base for interpreting financial statements even if the reader does not wish to involve themselves in preparing them. For those hardy on learning to prepare them from scratch, this guidebook teaches the skillset as well as pointing out the common costly errors that may be avoided, which many non-accounting experts mistakenly overlook. Taking into account the fact that readers may still prefer to hire accountants, reading this book enlightens ones ability to choose accordingly for whom would be granted access to take on such task and responsibility.

Impeccably structured, this guidebook is organized in a digestible learning format beginning with apparent knowledge then working its way into delivering more complexity for financial mastery. The neat organization also serves to help readers refer exactly back to specific topics and tools they need while working on one’s finances. Financial jargon and terminology is highlighted in-depth, outlining and defining important concepts and common accounting vernacular. At times redundant for the sake of clarity, the book makes sure to be as clear as possible when delineating complex items. I recommend this book to entrepreneurial readers, business owners, and anyone looking into starting their own business venture to become fully capable of handling finances without feeling the need to outsource to other bookkeepers who may not be as competent or trustworthy as oneself. This book is a one-stop-shop that offers simple and learnable approaches for managing the fiscal side of business, allowing readers to apply such concepts with ease and assurance that the monetary aspect of one’s business is flowing and in order.

[Pramod Anumula · Rating 4 out of 5]

The book is good for a beginner to understand how does the finances of the company (either small or big) are documented. It is in a simple and easy language targeting the beginners. However, I was looking to understand how the financials evolve as the company grows which is missing in the book. I would greatly appreciate if the author tries to put some data comparing the previous and present years data showing the changes and their effect in financial statements.

The book helps one to understand how to get a basic idea and also, what you have to look at in a financial statement to analyze the financial health of a company. The book is a short and simple read.

[Emily · Rating 5 out of 5]

Good accounting primer, lays out the relevant concepts succinctly, with minimal jargon, with an eye toward highlighting the so-what’s for the business. For people who already have a basic grasp of the 3 main financial statements, skip to part 4 which focuses on how to interpret the statements to make sense of a business + part 5 for how to spot amateur mistakes or common ways that intentional cooking of the books happens.

[Sean Flatley · Rating 3 out of 5]

A good reference quick guidance on Financial Statements

I enjoyed reading this quick guidance on Financial Statements and the content was just plain words.
Sadly it didn't have any samples, nor Financial Statements charts to understand the lay out of a Financial Statements or any graphic charts to clearly understand the subject.
Overall it's just a quick reference guidance book and handy to have.

[Vikash Anand]

Excellent book to get overview of the accounting

The book gives overview of the accounting and financial statements prepared in any business. It will be particularly useful to understand and decipher the financial statements i.e. Balance Sheet,Income Statement and Cash Flow Statement.

[Dinesh Vijayakumar · Rating 1 out of 5]

Only verbiage throughout, should have included examples, pictures, illustations, to help with understanding concepts. Also repeats same content again and again as the author is out of wits to write something meaningful and relevant.