Macroeconomics Chapter 1 Summary

Chapter one, Introduction to Financial Statements, was similar to a review chapter for me because my mother is an accountant herself, but I also heard some of the terms in my macroeconomics class last semester. Although there was a lot of review in this chapter, it also offered a lot of learning. This chapter was not very long and had a lot of vocabulary this is actually important to know for any business or accounting major. Some of the terms that are really important to know are a net income or a net loss Net income is when revenues exceed expenses, but a net loss is when expenses exceed revenues. Other important vocab and documents to know are the four financial statements. These statements are really important when it comes to investors and even creditors. Investors and creditors want to make sure that they will get their money back and that there is room for profits. I was really nervous for this class and even though this chapter was small and not very hard to understand, it was very interesting. The formulas were easy to see when looking at the statements that

This chapter used companies, such as Colombia, in the beginning and Seirra Corporation in the four financial statements. This chapter no only explained how it should be done, but it also explained the scandals and some that had scandals. Some of the companies talked about were Enron, WorldCom, HealthSouth, and AIG. Scandals are not good for corporations and businesses because it leads a potential investor or creditor to not trust the financial statements, because they were lies. Since scandals became an idea that was thought to be good, so corporations would get investors or creditors, it led to congress passing what the Sarbanes-Oxley Act (SOX). This was put into practice so that unethical behavior could be stopped, also possible future scandals. I never knew there were scandals with such big companies like