The title is a cheeky way of saying: we’re not trying to make you an accountant (nor am I an accountant) but let’s demystify some of the basics of accounting finance.
First lesson — the 3 main financial statements are…
- The Balance Sheet
- In a nutshell: the good stuff you own & the bad stuff you have obligations on
- The Income Statement a.k.a. the P&L
- In a nutshell: what’s the overall $ coming in, what do we have to subtract from that, & so what’s left over
- The Cash Flow Statement
- In a nutshell: $ in, $ out
And now some terminology…
- Sales & Revenue are synonyms and refer to the “top line [of the income statement]”
- Income, Profit, & Earnings are synonyms & refer to the “bottom line [of the income statement]”
Literally you memorize the above, your life changes in regard to being able to hold a conversation in regard to business.