![]() Explain the calculation and meaning of net worth.Ĭlay tablets interested Sumerian traders because the records gave them a way to see their financial situation and to use that insight to measure progress and plan for the future.Identify the results shown on the income statement, balance sheet, and cash flow statement.Compare and contrast the three common financial statements.Distinguish accrual and cash accounting.Tools for understanding your current situation are your accounting and financial statements. Understanding the current situation is not just a matter of measuring it, but also of putting it in perspective and in context, relative to your own past performance and future goals, and relative to the realities in the economic world around you. Eventually, the current situation becomes a time forgotten with the pride of success, or remembered with the regret of failure. It can determine the practical or realistic goals to have and the strategies to achieve them. It becomes the mark from which any progress is measured, the principal from which any return is calculated. This assessment becomes the point of departure for any strategy. In financial planning, assessing the current situation, or figuring out where you are at present, is crucial to determining any sort of financial plan. ![]() ![]() Since the first shepherd counted his sheep, there has been accounting. Gary Giroux, (accessed January 19, 2009). In recorded history, there are “accounts” on clay tablets from ancient Sumeria dating from ca. Measuring by counting, by adding it all up, by taking stock, is probably as old as any human activity. Man is the measure of all things of that which is, that it is of that which is not, that it is not. ![]()
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