What you will learn to do: Present financial information for other assets

As you have seen in this and prior sections, each category of assets on the balance sheet is presented in a predictable sequence. In addition to the balances in each account of the general ledger that are the results of journal entries recording each transaction, accountants must collect and report on qualitative information. This means that accountants have to be adept at communicating both with numbers and with words.

You should be starting to understand some of these disclosures and how they relate to the numbers on the four (or five) financial statements, and by now you should automatically be looking to verify that the numbers in the sub-schedules tie to or otherwise explain the numbers on the face of the financials.

Also, you should be starting to realize that GAAP is more than just bookkeeping, as accountants look for guidance on things such as how to apply principles like matching, materiality, and usefulness of information, to the day-to-day operations of a business.

For instance, how useful would it be to compare financial statements of two similar companies if one company decided to report R&D as an expense, and another decided to capitalize R&D as an intangible asset?