About This Section This book is written for people who need to use nancial statements in their work but have no formal training in accounting and nancial reporting. Don't feel bad if you fall into this category. My guess is that 95 percent of all non-nancial managers are nancially illiterate when it comes to un- derstanding the company's books. Let's proceed toward some enlightenment. This section is about nancial state- ment structure and about the specialized vocabulary of nancial reporting. We will learn both together. It's easier that way. Much of what passes as complexity in ac- counting and nancial reporting is just specialized (and sometimes counterintui- tive) vocabulary and basically simple re- porting structure that gets confusing only in the details. The box below shows some of this confus- ing vocabulary. It is absolutely essential to use these words correctly when discussing nancial statements. You'll just have to learn them. It's really not that much, but it is important. Look at these examples: 1. Sales and revenue are synonymous and mean the "top line" of the Income Statement, the money that comes in from customers. 2. Prots, earnings and income are all synonymous and mean the "bottom line," or what is left over from revenue after all the costs and expenses spent in generating that revenue are subtracted. Note that revenue and income have different meanings. Revenue is the "top line" and income is the "bottom line" of the Income Statement. Got that? 3. Costs are money (mostly for materi- als and labor) spent making a product.