In a Berkshire shareholders' annual meeting, a New York University MBA student asked Buffett for his advice on how to develop Buffett-like skills. In his response, Buffett mentioned that the student should take as many accounting course as possible.
Remember that you are a consumer and not a prepare of financial information. Act like a detective trying to understand the company's business from reading financial statements.
Buffett reads a lot of financial reports; and for him, perhaps, that is like reading detective novels. As a reader of financial statements, you could have fun discovering behind-the-curtain stories.
Accounting numbers are based on a large number of estimates, and hence, they are not really hard numbers. Yet, academic research shows that long-short investing strategies can often be developed by using accounting knowledge.
When you study financial statements, be a skeptic. Most accounting numbers are reliable, but you must remain vigilant.
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Videos-Financial Accounting by Susan Crosson
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