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Firstly, you must know the sturcture and basic concept of accounting, for example: double entry bookkeeping, journals and ledger accounts and trial balance. These concepts are the basic of perparing and analysing financial statements. And you’d better master the important following:
- balance sheet
- income statement
- cash flow statement
- the difference between balance sheet and income statement
- balance sheet accounts
- income statement accounts
- the formula, format and template of cash flow statements: indirect and direct methods
- balance sheet analysis
- income statement analysis
- cash flow analysis.
For that the balance sheet shows the financial situation of a company at a point in time (the balance sheet date). Income statement reflects the operational results of the company over a period of time. And cash flow statement reflects the cash inflow and outflow within a certain period. You should note the cash shortfall, because many companies go bankrupt is just because of cash break, but not how much debt the company has. So you must always be attention to cash flow, including: operating cash flow, financing cash flow and investing cash flow.
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