Balance Sheet

• To prepare a GAAP-abiding balance sheet, you need three items: assets, liabilities and equity. Assets represent anything a company or person owns and uses to meet operating or lifestyle goals. Examples include cash, merchandise and land. Set short-term assets apart from long-term assets. The liquidity cutoff is one year, so resources with a longer useful life are long-term assets. Then, classify debts based on maturity, which means the time frame before a liability becomes due. Liabilities and debts mean the same thing, and examples include loans, bonds payable and salaries. The final balance sheet component is equity, which incorporates money investors poured into a business.
  
  

Income Statement

• Under GAAP -- and other regulatory guidelines, for that matter -- a properly prepared income statement displays a company's revenue, expenses and net income. The result is net loss if operating charges exceed revenue. Other names for income statements are P&L, report on income and statement of profit and loss. This report shows how much money a company made or lost during a given period, as well as cash that came from top customers and money the organization ponied up to settle operating commitments. Revenue items include sales and investment gains; expenses include material costs, litigation and rent.
  
  

Statement of Cash Flows

• A statement of cash flows has three sections: operating, investing and financing activities. Memorize these sections because GAAP and professional edicts require that accountants follow this precise order when preparing a liquidity report, which is the other name for a statement of cash flows. In operating cash flows, include things like payments from customers and vendor remittances. In investing cash flows, add every transaction that relates to sales and acquisitions of fixed assets. These run the gamut from equipment and land to computer hardware along with commercial and residential establishments. Cash flows from financing activities deal with funds a company raised, either through borrowing arrangements or stock and bond issuance.
  
  

Equity Statement

• A company's equity statement displays items as varied as common stock, preferred shares, retained earnings and dividend remittances. Equity capital comes from money that financiers doled out to purchase shares on financial markets, whether they be electronic or physical. Examples include the New York Stock Exchange, the Tokyo Stock Exchange or NASDAQ.