Chapter 6
Reporting Financial Condition in the Balance Sheet
In This Chapter
Breaking down the balance sheet
Building and filling out a balance sheet
Valuing assets in balance sheets
Your rich aunt just left you a small fortune, and you’ve always wanted to own and manage a business. Well, wouldn’t you know? The owners of a reputable business in your hometown want to sell out. It’s a privately owned corporation, and the shareowners offer to sell all their stock shares to you. You ask to see the business’s latest annual financial report, but before the present owners hand over this information, they ask you to sign a confidentiality agreement. This contract requires that if you decide not to buy the business, you must keep confidential all the information in the financial report. You may not divulge anything you learn from the financial report. You agree and sign the agreement.
The annual financial report of a business includes four essential elements:
Income statement for the year just ...
