These articles are driven at the nitty-gritty study of accounting ideas, practices, and principles.
In my opinion and experience, the Balance Sheet is the most neglected and least understood financial document in the small business world. Too often a small business owner will skip the Balance Sheet entirely to focus solely on the Income Statement. Even if the Balance Sheet is utilized in decision making — it is often only the Cash & Cash Equivalents line item. Two significant issues exist from ignoring the balance sheet. First, the biggest misclassification of entries occurs on the Balance Sheet. Second, a great wealth of knowledge is missed from not correctly interpreting the picture created from Balance Sheet data.
Assets are everything you own or are owed. Liabilities are everything you owe. Equity is made up of all the contributions and withdrawals of the shareholders as well as the current and retained earnings of the business.
Data drives decisions. I might end up writing this a thousand times… but you first need to have some useful data before arriving at a conclusion.
At ProvenCFO, we focus on simplifying the Income Statement as much as possible to ensure the lessons are easy to understand and apply. A complicated financial statement is just a simple financial statement with more detail on the front page.