Reference
The accountant's library
Structured practical references that start with a work question, explain the treatment, source and boundary, then lead to a lesson or tool where you apply it.
Reading the statement of financial position
A picture at a moment: what the business owns, what it owes, and what is left for its owners. Its ordering is not cosmetic — it says when each item turns into cash.
Practical output: Work note: Reading the statement of financial position — A structured explanation, every official rate with source and review date, then a direct path to a lesson, tool or track.
A decision from the reference: Assets = liabilities + equity. Not an imposed rule but a consequence: everything the business owns was funded either by others or by its owners, so the two sides cannot come apart.
Reference boundary: Reviewed on 2026-08-18. Before relying on the treatment, open the linked official source and confirm that it applies to the period facts and the organisation's policy.
Reading the income statement
A period's performance, ordered downward from revenue. Every line between revenue and net profit answers a different question about the business.
Practical output: Work note: Reading the income statement — A structured explanation, every official rate with source and review date, then a direct path to a lesson, tool or track.
A decision from the reference: Revenue less cost of revenue gives gross profit, which measures the efficiency of production or buying alone. Operating expenses are then deducted to give operating profit — the performance of the activity before the effects of financing and tax.
Reference boundary: Reviewed on 2026-08-18. Before relying on the treatment, open the linked official source and confirm that it applies to the period facts and the organisation's policy.
The cash flow statement by the indirect method
It starts at profit and ends at the cash that actually moved. The indirect method is the one most used, because it is built from figures the books already hold.
Practical output: Work note: The cash flow statement by the indirect method — A structured explanation, every official rate with source and review date, then a direct path to a lesson, tool or track.
A decision from the reference: Operating measures the cash the activity itself generates, and it is the one that matters most: a healthy business funds itself from it. Investing measures the buying and selling of assets. Financing measures borrowing, repayment, capital movements and distributions.
Reference boundary: Reviewed on 2026-08-18. Before relying on the treatment, open the linked official source and confirm that it applies to the period facts and the organisation's policy.