Financial Fundamentals: Financial Statements and Balance Sheets

Photograph: Dr. Louella Moore presenting at Washburn Law.Dr. Louella Moore was hosted by the Business and Transactional Law Center on September 12, 2018. She was the first speaker of the Center's Fall 2018 Financial Fundamentals Series. Moore, a professor of accounting in Washburn University's School of Business, explained some of the fundamentals of accounting and how they interact with the practice of law in her discussion of financial statements and balance sheets.

Moore explained that both accounting and law are means of effecting order in society. She walked through some of the basic assumptions of accounting, and cultural changes that have taken place in the way businesses operate. Moore pointed out that, in the past, companies remained on the Fortune 500 list for an average of 60 years. Currently, companies remain on the list for only an average of 20 years.

Moore also pointed out the ways in which the U.S. accounting system grows out of classical Western philosophy. She explained that Aristotle believed that every item should fit in a single, objective, non-overlapping box. The U.S. accounting rules are structured with a similar goal, but unfortunately there are many situations in which something does not fit in a single box. To explain this idea, Moore distributed copies of a company's financial statements and walked through them with the students.

Moore showed students how the balance sheet depicted the company's position, and worked through the company's assets and liabilities. She also went over the ways in which the classification of a company activity can be controversial. Moore explained that there are different ways that accountants can interpret whether something is an asset or an expense, making it difficult for every item to fit in one box. For example, accountants may debate whether "research and development" constitutes an asset (as probable future benefits) or an expense. Following the discussion of balance sheets, Moore worked through the income statements and showed the students how the financials help investors and shareholders understand the company.

Washburn Law thanks Dr. Moore for taking time from her busy schedule to launch the Business and Transactional Law Center's Fall 2018 Financial Fundamentals Series.

Photograph: Students at Washburn Law listening to fundamentals of accounting presentation by Dr. Louella Moore.