5. Summary of key learnings so far
5.1 The Value Cycle
The Value Cycle is a conceptual model that reflects the essence of how business works, and how it achieves its purpose.
5.2 Accounting is an asset-centric story
The other general ledger elements (Liabilities, Equity, Revenue and Expenses) are all defined in terms of their relationship to Assets.
5.3 Income statement - information flow
The layout and format of the Income Statement varies markedly from those produced by law for investors (financial reporting) and those produced for internal-only use (management reporting) which are much more detailed and flexible approach. Below is the typical information flow within an income statement produced for management use. It starts at the top and works down via 'cost of sales' and 'gross profit' to the net profit.