[MUSIC] Welcome to the third week of this accounting course. If you're still here, congratulations. The best is still to come. As you will remember, our goal here is that by the end of the course, you are able to read and interpret financial statements for decision making. In order to do that, we need to learn the accounting mechanics. I said the first day that accounting is the process that records, classifies and summarizes business transactions, economic events that take place in the company. For the of managers, but also, especially I would say, for the shareholders and for other external users that are not familiar with the day to day operations of the firm. By learning how to account for each transaction and its impact on the financial statements, you will then be able to read the financial statements and understand the underlying transactions and how they are driving the performance of the business. This week we are going to account for a new fiscal year at the campus bookstore. We are going to review some of the transactions we already covered in the previous period such as sales, costs of goods sold, depreciation and amortization etcetera. And we are also going to introduce a few new transactions that are quite common. After recording all of these transactions, we are going to prepare the financial statements. First of all, the balance sheet. Remember, everything is there. Second, the income statement that we have already introduced in the previous week, and talks about perfectibility. And finally, we are going to introduce a third financial statement that we have not seen yet. Called the cash flow statement. The cash flow statement will inform us about the liquidity of the firm. It turns out that your business could be very profitable, but if it runs out of cash, you're in big trouble. This is why we need a specific financial statement that takes care of cash, that analyzes cash. Okay. So let's get started with the third week. [MUSIC]