Accounting Self Study Guide for Staff of Micro Finance …

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Accounting Study Guide. Lesson 6. It is important that this is forecasted accurately for two reasons:. 1. Idle funds do not earn revenue. …

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Accounting - Self Study Guide for Staff of Micro Finance Institutions
LESSON 6
Relationship between Financial Statements
OBJECTIVES The purpose of this session is to introduce the Statement of Changes in Financial Position and to explain the relationship between the Balance Sheet and the Income Statement. In particular, the equity component of the Balance Sheet and changes to it will be examined.
You will learn how to create a Statement of Changes in Financial Position and how to identify each transaction or event as being a “cash” or a “non-cash” item. You will also be able to relate the three financial statements to each other and to see how each transaction or event which occurs at the organization has an effect on one or all statements. Topics covered include:
?Statement of Changes in Financial Position
?Equity Fund Balance
?Investments by Owners
?Income (profits)
?Distributions to Owners
Statement of Changes in Financial Position
The Statement of Changes in Financial Position summarizes the changes that occurred in the financial position of the organization by showing how it acquired resources and how it applied or used these resources. Organizations can choose to create the…