Financial Statements Step-by-Step Guide to... (PDF) (2024)

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“A witty, concise and delightfully logical guide for the high-techentrepreneur. Everything you need to know, but not a line more.I’m already recommending it to the faculty, students and businesscolleagues who are starting companies.”Lita NelsenDirector, Technology Licensing OfceMassachusetts Institute of TechnologyCambridge, Massachusetts“I wish this book were around when I started my rst company.The entrepreneur can learn in one evening’s reading what it tookme two years of learning-by-doing! I plan on giving a copy to everyCEO in our venture fund’s portfolio.”Gordon B. BatyPartner, Zero Stage CapitalCambridge, Massachusetts5 Star Reviews from Amazon.com ReadersThe Best Book on Financial Statements, Period! Wow, whata great book! I’m a technical professional and now no longer in thenancially confused majority.—Robert I. Hedges (Burnsville, MN)Simply the Best! Clearly the rst introductory book one shouldread. This book—a must on every managers shelf—adds value byproviding clear and concise denitions and relates them visuallyto the changing nancial statements. A tremendous bang for buck.Simply go get it and read it.—ClimbHighThe author has a gift that few experts have. He anticipatesall my newbie/beginner stupid questions… As soon as the littlevoice in my head asks, “But why did they do it this way?” the au-thor gives me the answer. This book has been of enormous value tome. It is an essential reference for anyone who needs to understandwhat business nances are about.—M. Kramer (United States)A Masterpiece. Every single nancial term is claried with alayman’s language. Moreover, for every single term, there is avery understandable example. Likewise, in every page there is asheet explaining all the transactions. I strongly believe that thisbook is a masterpiece for non-nancial managers.—a reader

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Excellent! I purchased this book for an MBA course and ended upusing it more than the assigned text. The author makes a compli-cated subject seem like child’s play!—Bill Holcomb (Cleveland, OH)Perfect book when rst learning… This is a wonderfully clearand concise introduction to the interpretation of nancial state-ments… Read this if you are not a CPA or MBA, but must “get ahandle” on Balance Sheets, Income Statements and Cash FlowStatements. This should be the rst book you buy.—Jack Fossen (Dallas, TX)Outstanding!! Looking to understand how nancial statementswork?...then purchase this book—there's none better. I am agraduate student nearing the completion of my MBA degree. Theauthor speaks in basic terms about what nancial statementsmean and how they work. This book puts it all together for thereader.—Joseph P. Gallagher (Bellinghan, WA)A very useful book. While the book gets only skin deep on ac-counting concepts, it does an excellent job in deconstructing howthe Income Statement, Statement of Cash Flows, and BalanceSheet are changed. Very few accounting related books make ex-plicit what happens the way this book does.—R. Chonchol (Florida)Want to understand nancial statements? I took an account-ing class...and I had difculty interpreting nancial statements.So I gambled and bought this book with a hope to unravel themystery on nancial statements. It really worked! Overall, theknowledge gained exceeds multiple folds of the time and money in-vested on this book!—Tuan minh TranExcellent, buy it!! If you are in the nance business, of anykind, and you are not an accountant, this book is for you.—Richard Gomez (San Diego, CA)WOW, Incredible. I took an accounting course at University, Inow wish that my professor used this book in the course. So easyto understand and with great examples. Suitable for anyone whowants to learn accounting the fast and easy way.—Kavkazy (Toronto, Canada)

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Revised and Expanded EditionFinancialStatementsA Step-by-Step Guideto Understandingand CreatingFinancial ReportsFranklin Lakes NJ

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Revised and Expanded EditionFinancialStatementsA Step-by-Step Guideto Understandingand CreatingFinancial Reportsby Thomas R. Ittelson

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Copyright 2009 by Thomas R. IttelsonAll rights reserved under the Pan-American and International CopyrightConventions. This book may not be reproduced, in whole or in part, in anyform or by any means electronic or mechanical, including photocopying,recording, or by any information storage and retrieval system now knownor hereafter invented, without written permission from the publisher, TheCareer Press.FINANCIAL STATEMENTS, REVISED AND EXPANDED EDITIONCover design by Jeff PiaskyPrinted in the U.S.A. by CourierTo order this title, please call toll-free 1-800-CAREER-1 (NJ and Canada:201-848-0310) to order using VISA or MasterCard, or for further informa-tion on books from Career Press.The Career Press, Inc., 3 Tice Road, PO Box 687,Franklin Lakes, NJ 07417www.careerpress.comLibrary of Congress Cataloging-in-Publication DataAvailable upon request.

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I dedicate this book to Alesdair, who has had the goodsense to become a lawyer and not an accountant.

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AcknowledgmentsMany people helped make this book possible. My special thanks goto Isay Stemp, who rst showed me that knowing a little nanceand accounting could be fun; to my agent, Michael Snell, whotaught me how to write a book proposal; and to Lisa Berkman,whose encouragement was invaluable as I drafted this revised andexpanded edition.Many thanks to my publisher, Ronald Fry of Career Press, forseeing promise in a preliminary version of this book and to KristenParkes, editorial director for Career Press, for her guiding of thisbook through to publication.Again with this second edition, as was the case with the rst, Iam indebted to my colleague Jack Turner for his thoughtful reviewof the words and numbers in this book. Also a special thanks toGraham Eacott for his careful reading and correction of the rstedition.These clients, colleagues and friends at one time or anotherhelped me to develop (whether they realized it or not) the conceptspresented in this book. My thanks to Gwen Acton, Marci Anderson,Molly Downer, Tim Duncan, Cavas Gobhai, Jack Haley, KatherineLeahey, Paul McDonough, Lita Nelsen, Paul O’Brien, Mel Platte,and Iruna and Chris Simmons.