A VERY DIFFERENT WAY OF LOOKING AT FINANCIAL STATEMENTS…

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PART I OF III…

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With interest rates going up and up and up it’s going to get harder to qualify for a mortgage.? The way you qualify for a mortgage is to have good credit, a good projection and a good balance sheet and income statement.? So, you have to, or must, know something about these two basic financial statements.? The lenders want to see certain things when evaluating a commercial real estate project and good financial statements are the key.? After being a practicing Certified Public Accountant for over 50 years before getting into real estate I know a little bit about financial statements.

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Get ready to have all the things that you thought you knew about reading financial statements get blown out of the water. This is a totally different perspective on what a financial statement tells us than you've probably ever seen before.? And remember that this is being written by someone who was a practicing Certified Public Accountant for over 50 years.

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I wrote this article because I am on Facebook each and every day to post my articles about what I do, and I see an article in Facebook that is supposed to teach you how to read a financial statement.? I would bet everything that I own that their article is a whole lot different from mine.? I would also bet that you have never seen an analysis of a set of financial statements like this one.? So, learn to look at things with a critical eye and question what you are looking at.? At first glance a balance sheet looks fine because the assets equal the liabilities and capital.? It’s a nice clean package.? But, farther analysis says something different.

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In just about all of the articles that I write I am talking about financial matters.? I talk about investing in Real Estate and all of the different forms of real estate, legally minimizing income taxes, appreciation, net operating income, and a host of other topics having to do with financial matters.? And how do we know how our investments are doing?? We look at a financial statement.?

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I haven’t prepared a GAAP financial statement in many years, and I know that the rules have had to change drastically over this time.? GAAP means Generally Accepted Accounting Principles and they keep on changing.? So, I am going to give you what I will call the remedial class on knowing about and reading and understanding financial statements and basic accounting.? You should know this because you are going to receive financial statements and income tax returns, which include financial information, on your investments.