APPROACH TO THE ANALYSIS OF THE IMPACT OF MANAGEMENT DECISIONS ON FINANCIAL STATEMENTS

Abstract

The article discusses a structured approach to understanding the impact of management decisions on three forms of financial reporting, through an analysis of changes in the objects of extended balance sheet equality. The logic of transformation of the compressed balance sheet equality «assets equal liabilities» into the extended one «cash and other assets equal liabilities plus owners' investments and other capital components plus period income minus period expenses» is shown. The argument for using extended balance sheet equality in the study of accounting is based on the fact that it clearly shows the relationship between the objects of three key reporting forms: balance sheet, income statement and cash flow statement. In a tabular format, examples of the impact of management decisions on changing the objects of financial reports are shown. The examples cover all types of business transactions that lead to a change in the components of balance sheet equality, and reflect the relationship of various stakeholder groups with business.