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Accounting Allah shmoop Financial reporting Are you all Once the

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technological boom boom and all of today's modern complexities became

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a thing or a factor more intricate financial reporting was

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suddenly a necessity Complexity of reporting and the chicken ary

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that went with it along with sleazy dealings and we're

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definitional curveballs demanded that the systems of reporting financial activity

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be codified or standardised or normalized financial reporting had to

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have its own format and it had to be very

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tightly bound Ah LA fifty shades It had to have

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rules such that when a bean counter cited working capital

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amortization of into tangibles Somalian subsidiary revenues or a some

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other abstruse concept while then everyone knew what she was

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talking about they were all on the same Paige and

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quite literally well The terms had to be deeply in

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granular early to find and then reported regularly IAEA usually

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quarterly and in fact inside of companies Reports are usually

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quote rolled up unquote or just added up monthly and

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then reported four times a year by forcing a monthly

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closing of books which means that all the numbers foot

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or add up or at least appear to be fully

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and deeply accurate when errors then do happen well they're

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made much smaller and easier to fix versus waiting say

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six months before really checking on heroes So this's the

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goal faring clear and timely reporting while then What are

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the guts of financial reporting anyway Like what is it

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Well basically think school A financial report is a report

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card given quarterly I'ii every three months which assets progress

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or lack thereof and what it all means in the

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context of a company's ongoing financial history Generally speaking public

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companies report financial progress quarterly in a pretty standard form

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so investors can more or less compare one cos quarter

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without of another The quarterly report is called the ten

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Q Report and it map through the annual report called

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A ten K Alright well financial reports all have a

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pretty well detailed and established set of elements they must

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contain to be legally considered complete and filed That is

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reports must conform to Gap All right well they're the

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three biggies here The unholy trinity of financial statements They

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include the income statement like revenues minus expenses equals profits

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profits per share and so on That's the income statements

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the first leg on the stool there Alright next leg

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the balance sheet and this one shows the assets and

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liabilities that a company has what it owes what it's

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owed what cash and or dead it owes and his

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ode stuff like that And then the third leg That

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cash flow statement Yeah like where's the cash actually flowed

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in this period Did we make cash generated And where

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did it come from anyway You know like company may

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have made two hundred million box in a given year

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but had outward cash flow of five hundred million bucks

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because it spent seven hundred million dollars on a brand

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spanking new factory Well it'll then D appreciate that factory's

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cost over time And yeah it's what happened So anyway

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we connect the dotted lines between each of these key

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three elements which should give us Ah crystal clear picture

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of a company's progress in that time period And you

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need all three right The key idea here is that

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cash has to be tracked in multiple venues to give

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fair and accurate reporting on company progress That is in

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fact a fair reflection of how well or poorly the

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company is doing And why the cash Well it's hard

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to hide it from prying eyes even if the company's

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counters were kind of sneaky right So we follow the

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cash more than anything else when we think about accounting

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So yeah just like high school students companies get report

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cards and if their grades are bad enough home then 00:03:43.113 --> [endTime] get grounded like well permanently

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