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Extra resources for Accounting Equations and Answers

Sample text

This icon marks material that your college professor might put on the board before class starts, noting the important points that you should remember at the end of class. Accounting is the language of business, and, like all languages, the vocabulary of accounting contains many specialised terms. This icon identifies key accounting terms and their definitions. You can also check the glossary (Appendix A) to find definitions of unfamiliar terms. This icon is a caution sign that warns you about speed bumps and potholes on the accounting highway.

Shareholders wouldn't invest in a business without a clear understanding of the financial health of the business, which regular financial reports (sometimes just called the financials) provide. In short, accountants are much more than bookkeepers - they provide the numbers that are so critical in helping business managers make the informed decisions that keep a business on course toward its financial objectives. Business managers, investors, and others who depend on financial statements should be willing to meet accountants halfway.

We prefer to use pound signs only for the first number in a column and for a calculated number. In some financial reports, pound signs are put in front of all numbers, but usually they aren't. To indicate that a calculation is being done, a single underline is drawn under the bottom number, as you see below the 15,000,000 cost of goods sold expense number in the sample profit and loss account. The final number in a column is usually double underlined, as you can see for the £4,000,000 profit number in the sample profit and loss account.

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