Posted by: Always Skeptical
In reply to: oreodiamonds who wrote msg# 126185 Date:10/21/2006 8:53:00 AM
Post #of 128184
OreoDiamonds,
When you release audited FS, as a rule you are presenting 2 years of financial statements.
And what is not known or realized by many investors is that in the annual FS, you really are getting three years of date because of the cash flow statement. Unless you've prepared one, you wouldn't realize why. In order to a number for the cash flow statement you are subtracting the current year from the prior year for a lot of the figures that show up in the operating section of the cash flow statement.
So, if you are giving cash flow numbers for 2005, you use 05 and 04 numbers, and for 2004, you would be using numbers from 04 and 03. A lot of the numbers from 03, which are used to calculate the 2004 cf numbers, are balance sheet numbers. Hence, you are using the balance sheet from 2003, 2004, and 2005 to get cash flow numbers for 2004 and 2005.
And auditors won't accept the 2003 balances to calculate the cash flows for 2004, unless they get comfortable with them, ie, some hard proof, looking at ledger, sending out confirms, looking at detail, etc..
Most interesting will be the transferred assets, but even more interesting will be what else shows up, because all of us good accountants know if you got a debit, you have to have a credit. So, we either hit our liability section, our owner's equity, or have exchanged an asset. Cause as we all know, you don't get something for nothing.
Go Tigers!!
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