About This Chapter
Fundamental Financial Principles - Chapter Summary
Learn about the fundamental principles of finance with these convenient, self-paced lessons. You'll review the purpose of balance sheets, accounting liabilities, assets, and more. Specifically, this chapter will also examine:
- Financial assets
- The significance of an income statement
- The statement of cash flows
- How to define net worth
- Operating budgets
- Preparing a corporate budget
- Variances in budgets
We strive to keep the learning experience enjoyable and effective. To keep you engaged in the learning process, you'll find interesting video and text lessons, created by industry experts, to help illustrate the material. If you need to review a particular portion of a video lesson, you can utilize the clickable timeline for easy navigation. To test your understanding of the topics, take a quiz after each lesson. When you're ready to see how well you've absorbed all of the information, take the cumulative chapter exam.
1. The Balance Sheet: Purpose, Components & Format
There are four financial reports that make up a group known as the financial statements. We will take a walk with one of those reports - the balance sheet - and learn what it is, what items are included on it and what its role in the group is.
2. Operations of an Income Statement
How do you know how much money your company, or a company you're interested in investing in is making? In this lesson, we'll look at the art of the income statement, including different types and the major information to be found on them.
3. The Statement of Cash Flows: Purpose, Format & Examples
There are four financial reports that are required in financial statements. In this lesson, you will learn about the fourth and final report - the statement of cash flows. You'll learn what the makeup of the statement is, its purpose, and why it is important to users of the financial statements.
4. Net Worth: Personal Assets & Liabilities
In this lesson, we'll discuss the components of a balance sheet: assets, liabilities and net worth. We'll define each, discuss the sub-categories and provide examples.
5. What Are Assets? - Definition & Examples
In this lesson, you will learn about assets, the first variable of the basic accounting equation. We will discuss the definition, categories, and classifications of assets.
6. Liabilities in Accounting: Definition & Examples
Every business has liabilities. In this lesson, you'll learn what liabilities are and how they fit into the overall financial picture of a business, and you'll be provided some examples.
7. What Is Operating Budget? - Definition & Examples
What are operating budgets? In this lesson, learn about how operating budgets are created and explore how they can be used to help businesses succeed. Some examples will be given.
8. How to Prepare a Budget for a Corporation
Budgets are some of the most important documents that a company will produce. In this lesson, we'll learn how to prepare a budget for a corporation, starting by planning the budget and ending with distribution.
9. Variances in Budgets: Definition, Calculations & Analysis
What are variances in budgets, and why do we calculate them? In this lesson, we discuss what they are, why we care about them, and how to analyze variances in our own reports to obtain information we can use to improve our results.
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