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Learn2Invest Session 7-Financial Statements.pdf
This document is a presentation on financial statements by Vivek Bajaj. It introduces key concepts like the journal, ledger, profit and loss account, balance sheet, and cash flow statement. It explains the basic rules of accounting and how transactions are recorded in journals and ledgers. The presentation also discusses how to read and analyze important items in an annual report like footnotes, schedules, and management discussions. The goal is to help attendees understand how to create and interpret basic financial statements and evaluate companies using annual reports.
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Learn2Invest Session 7-Financial Statements.pdf
- 1. VIVEK BAJAJ LEARN2INVEST Know where tostart and how to start! PRESENTS SESSION 7
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- 3. GOLDEN RULES OF ACCOUNTING LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ DEBITTHE RECEIVER, CREDIT THE GIVER. DEBIT WHAT COMES IN, CREDIT WHAT GOES OUT. DEBIT ALL EXPENSES & LOSSES, CREDIT ALL INCOMES & GAINS.
- 4. WHAT ARE THE TWO BAKCBONES OF ACCOUNTING? JOURNAL LEARN2INVEST| YOUTUBE.COM/VIVEKBAJAJ LEDGER
- 5. WHAT IS A JOURNAL? Journalis a book where we record transactions in a chronological order. It is also the book of primary entry as all transactions are recorded here before being posted in the ledger. The process of recording transactions in a journal is known as 'journalisation' while the transaction itself is known as a 'journal entry'. LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 6. CASH A/C Dr. 45000 SALES A/C Cr. 45000 LEARN2INVEST| YOUTUBE.COM/VIVEKBAJAJ IF KREDENT INFOEDGE SOLD 40 COURSES @ RS 1000 EACH FOR CASH, WHAT WOULD THE JOURNAL ENTRY BE? S a m p l e S a m p l e S a m p l e
- 7. WHAT IS A LEDGER? Asper the double entry system of bookkeeping, each transaction leads to two entries in a journal. These entries are then posted in their respective accounts called ledgers. In simpler words, you may be able to relate all information in major financial statements being picked up from their ledgers. General ledger is alo referred as the principal book. LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 8. Dr. Cr. DATE DESC.AMT. DATE DESC. AMT. XXXX To Sales 45000 LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ CASH A/C SALES A/C S a m p l e S a m p l e S a m p l e Dr. Cr. DATE DESC. AMT. DATE DESC. AMT. XXXX By Cash 45000
- 9. WHAT IS P/L ACCOUNT? Thisis the first financial statement that is prepared by the company and is also referred to as the income statement, statement of operations and statement of earnings. As the name suggests, this statement gives us insight into whether the company is making profit or losses and also summarises the company operations. It provides us information of the revenue, expenses incurred, depreciation, and finally taxes. It also includes the earning per share number. LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 10. LET'S HELP YOU FIGUREOUT HOW TO CREATE AND READ A P/L ACCOUNT! LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 11. WHAT IS BALANCE SHEET? BalanceSheet is the financial statement of the company that tells us three key things about the company. The first one is what the company owns. The second one is what the company owes and the final one what is the owner's equity. All of this at a given point in time. Also, the balance sheet only reflects a true picture if the assets and liabilities tally i.e. Assets= Liabilities+Equity LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 12. LET'S HELP YOU FIGUREOUT HOW TO CREATE AND READ A BALANCE SHEET! LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 13. WHAT IS CASH FLOW STATEMENT? CashFlow Statement is a financial statement of the company that tells us about the generation and expense of cash in a company. This statement helps us understand the company operations and has three major components namely: Cash from Operating Activities, Cash from Investing Activities and Cash from Financial Activities. LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 14. LET'S HELP YOU FIGUREOUT HOW TO CREATE AND READ A CASH FLOW STATEMENT! LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 15. WHAT IS ANNUAL REPORT? Asthe name suggests, the annual report is published by the concerned company annually and sent to all shareholders. It is also available for download publicly at the company website (usually in the investor's section). All data mentioned in the annual report is dated to 31st March (end of the financial year). Being an official document, it is a detailed report of the company financials and the company's message to its investors. It also includes broader analysis of the way ahead for the company. LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 16. X-RAY ITEMS INAN ANNUAL REPORT! Footnotes Every financial statement comes with footnotes next to figures and they form the crux on how the numbers are arrived at. Schedules Schedules provide other data like depreciation, capital expenditure, operational expenditure, etc. and help in analysis. LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
- 17. MRI ITEMS INAN ANNUAL REPORT! Management Discussions One of the most important sections as this tells us about management's take on the company. Corporate Governance This sections tells us about the best practices employed by the company to operate in a legal framework and the loopholes. LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
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- 19. THANK YOU! TAKE A SIMPLEIDEA, AND TAKE IT SERIOUSLY. CHARLIE MUNGER LEARN2INVEST | YOUTUBE.COM/VIVEKBAJAJ
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