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The activities / operations / processes of the company (reporting entity) have impact on ALL the CAPITALS
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The financial balance sheet of the company (reporting entity) are changed by the financial transactions of the company as reported in the P&L account.
These changes are reported in the company balance sheet. In conventional financial accounting there is only accounting for the financial transactions and the financial dimension of the company balance sheet.
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The next slide reflects:
… how the money P&L report describes the impact of the money transactions on the money balance sheet of the operation … while ignoring IMPACTS of the operations because
(1) they are not money transactions and
(2) they are outside the reporting envelope.
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A better framework for reporting would be this …
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So think of all this miniaturized:
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