CHAPTER 1The Big Three Financial Statements

STARTING WITH A QUICK BACKSTORY

As we launch into the content and concepts presented throughout this book, I would like to begin by referring to a book my father and I coauthored, titled How to Read a Financial Report (now in its ninth edition). This book, first written by my father and published by Wiley over 30 years ago, has stood the test of time and represents one of the top “go‐to” technical accounting and financial references used by businesses, colleges, and organizations around the world. The book has so much useful information that you will find several overlaps and references to key financial and accounting concepts discussed in this book. However, there are also significant differences between these books that at heart are centered in the following two items:

  • First, our book How to Read a Financial Report is centered on the premise of an external party (e.g., an investor, lender, etc.) evaluating or analyzing an organization from the outside looking in. That is, all the financial and accounting information produced has been done with the understanding that the audience will be external, independent third parties who are not privy to the organization's internal operations and related financial information and data. This represents a critical difference between this book and How to Read a Financial Report that will become evident moving through the material. The content of this book has been structured to look at financial ...

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