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Financial Accounting - Lecture 3

Lecture 3 - Elements of an Annual Report and Financial Ratios


1. Become familiar with the main parts of an annual report:

a. CEO's letter,
b. description of business activity,
c. management discussion and analysis,
d. audit report,
e. financial statements,
f. description of accounting procedures,
g. footnotes.

2. Understand the purposes of the four financial statements:

a. balance sheet,
b. income statement,
c. statement of cash flows, and
d. statement of owners' equity.

3. Become familiar with the types of economic activity that are associated with common financial-statement line items, and thus the reasons why users of financial reports might find these items useful.

4. Understand the distinction between recognition and disclosure of information.

5. Begin to understand commonly-used financial ratios.

Prof. Richard Frankel, Prof. George Plesko, Prof. Kin Lo
15.515 Financial Accounting, Fall 2003
(Massachusetts Institute of Technology: MIT OpenCourseWare)
Date accessed: 2009-04-30
License: Creative Commons BY-NC-SA

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