Read any company's accounts,
line by line.
A set of accounts is a record of decisions: what a company bought, what it owes, what it earned and what it kept. Reading the Books follows Libby, Libby & Hodge's Financial Accounting from the first transaction to a full annual report. You will post entries to a ledger, make the year-end adjustments, rebuild operating cash flow from net income, and finish by auditing a stack of draft accounts yourself. No finance background needed.
Every set of accounts rests on one identity: what a business owns equals what it owes plus what its owners have put in or left in. Follow a new bike shop through its first transactions, record each one twice, and learn the debit-and-credit bookkeeping that has kept ledgers balanced for five hundred years.
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Level 1 · ▶ NEXT Four Statements, One Business ★★★ ◆
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Level 2 Assets = Liabilities + Equity ★★★ ◆ 🧩 Builds on L01
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Level 3 Every Transaction Has Two Sides ★★★ ◆ 🧩 Builds on L02
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Level 4 Debits, Credits and the Ledger ★★★ ◆◆ 🧩 Builds on L03
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👑Level 5 · EXAM The Equation Exam ★★★ ◆◆ 🧩 Builds on L04
Profit is measured, not counted. Learn how the income statement is laid out, why revenue is recorded when it is earned rather than when cash arrives, and the adjusting entries an accountant makes on the last day of the year before the books can be closed.
Each line on a balance sheet hides an estimate. Work through them one at a time: how much of what customers owe will actually be collected, which cost of inventory goes to the income statement, how fast a machine wears out, what the company has promised to pay, and what belongs to the shareholders.
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Level 11 Receivables and Bad Debts ★★★ ◆◆ 🧩 Builds on L10
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Level 12 Inventory and Cost of Goods Sold ★★★ ◆◆ 🧩 Builds on L11
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Level 13 Long-Lived Assets and Depreciation ★★★ ◆◆ 🧩 Builds on L12
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Level 14 Liabilities ★★★ ◆◆ 🧩 Builds on L13
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Level 15 Shareholders' Equity ★★★ ◆◆ 🧩 Builds on L14
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👑Level 16 · EXAM The Balance Sheet Exam ★★★ ◆◆◆ 🧩 Builds on L15
A profitable company can still run out of money. Build the statement of cash flows section by section, convert net income into operating cash flow with the indirect method, and trace a single transaction through all three statements until the links between them become obvious.
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Level 17 The Cash Flow Statement ★★★ ◆◆ 🧩 Builds on L16
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Level 18 From Net Income to Operating Cash ★★★ ◆◆◆ 🧩 Builds on L17
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Level 19 How the Three Statements Link ★★★ ◆◆◆ 🧩 Builds on L18
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👑Level 20 · EXAM The Cash Exam ★★★ ◆◆◆ 🧩 Builds on L19
Put it all to work on a full annual report. Find your way around a 10-K, compute the ratios analysts lean on, and learn the patterns in the numbers that tend to show up before a company restates its accounts. The world ends with a live audit.
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Level 21 Inside an Annual Report ★★★ ◆◆ 🧩 Builds on L20
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Level 22 Ratio Analysis ★★★ ◆◆◆ 🧩 Builds on L21
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Level 23 Earnings Quality and Red Flags ★★★ ◆◆◆ 🧩 Builds on L22
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👑Level 24 · EXAM Sign-Off: The Final Audit ★★★ ◆◆◆◆ 🧩 Builds on L23
Part of 📊 CFA® Candidate & Analyst step 2/5
Then try 🏢 Capital Quarters · 🎓 Charter Climb
Sign off the accounts
Clear the 24 levels and five exams and you can take a set of accounts apart. You will be able to trace a transaction through all three statements, judge whether revenue and expenses landed in the right year, rebuild operating cash flow from net income, and recognise the patterns that tend to come before a restatement. The final exam hands you ten client files and asks you to sign them off, or refuse to.
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