Accounting involves communication and the use of language to convey business information. As with all languages, communication can create misunderstandings if one does not understand the underlying assumptions and principles of language structure.
Bookkeepers keep the financial records of a business enterprise accurate to the penny. Accountants use the bookkeeper’s numbers to produce the enterprise’s financial statements: the income statement, balance sheet and statement of cash flows. Hence, it is understandable that investors and non-accountants consider the reported profits of a business – the “bottom line” of an income statement – to be the last word in financial reporting. But is it?
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