Accounting All-in-One For Dummies with Online Practice

Cover
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Book 1: Setting Up Your Accounting System
Chapter 1: Grasping Bookkeeping and Accounting Basics
Knowing What Bookkeeping and Accounting Are All About
Wrapping Your Brain around the Accounting Cycle
Working the Fundamental Accounting Equation
Chapter 2: Outlining Your Financial Road Map with a Chart of Accounts
Getting to Know the Chart of Accounts
Setting Up Your Chart of Accounts
Mulling Over Debits versus Credits
Understanding Double-Entry Accounting
Chapter 3: Using Journal Entries and Ledgers
Keeping a Journal
Bringing It All Together in the Ledger
Putting Accounting Software to Work for You
Chapter 4: Choosing an Accounting Method
Distinguishing between Cash and Accrual Basis
Sorting through Standards for Other Types of Accounting
Considering the Conceptual Framework of Financial Accounting
Book 2: Recording Accounting Transactions
Chapter 1: Keeping the Books
Analyzing the Effect of Business Transactions
Managing Your Bookkeeping and Accounting System
Wrapping Up with End-of-Period Procedures
Chapter 2: Tracking Purchases
Keeping Track of Inventory
Buying and Monitoring Supplies
Staying on Top of Your Bills
Chapter 3: Counting Your Sales
Collecting on Cash Sales
Selling on Credit
Proving Out the Cash Register
Tracking Sales Discounts
Recording Sales Returns and Allowances
Monitoring Accounts Receivable
Accepting Your Losses
Chapter 4: Processing Employee Payroll and Benefits
Staffing Your Business
Collecting Employee Taxes
Determining Net Pay
Surveying Your Benefits Options
Preparing Payroll and Posting It in the Books
Depositing Employee Taxes
Chapter 5: Computing and Reporting Payroll Taxes
Paying Employer Taxes on Social Security and Medicare
Completing Unemployment Reports and Paying Unemployment Taxes
Carrying Workers’ Compensation Insurance
Maintaining Employee Records
Book 3: Adjusting and Closing Entries
Chapter 1: Depreciating Your Assets
Defining Depreciation
Evaluating Your Depreciation Options
Tackling Taxes and Depreciation
Chapter 2: Paying and Collecting Interest
Deciphering Types of Interest
Handling Interest Income
Delving into Loans and Interest Expenses
Chapter 3: Proving Out the Cash
Why Prove Out the Cash?
Making Sure Ending Cash Is Right
Closing the Cash Journals
Using a Temporary Posting Journal
Chapter 4: Reconciling Accounts and Closing Journal Entries
Reconciling Bank Accounts
Posting Adjustments and Corrections
Prepping to Close: Checking for Accuracy and Tallying Things Up
Posting to the General Ledger
Checking Out Computerized Journal Records
Chapter 5: Checking Your Accuracy
Working with a Trial Balance
Testing Your Balance by Using Computerized Accounting Systems
Developing a Financial Statement Worksheet
Replacing Worksheets with Computerized Reports
Chapter 6: Adjusting the Books
Adjusting All the Right Areas
Testing an Adjusted Trial Balance
Book 4: Preparing Income Statements and Balance Sheets
Chapter 1: Brushing Up on Accounting Standards
Exploring the Origins of Accounting Standards
Recognizing the Role of the American Institute of Certified Public Accountants (AICPA)
Checking Out the U.S. Securities and Exchange Commission (SEC)
Getting to Know the Financial Accounting Standards Board (FASB)
Chapter 2: Preparing an Income Statement and Considering Profit
Understanding the Nature of Profit
Choosing the Income Statement Format
Deciding What to Disclose in the Income Statement
Examining How Sales and Expenses Change Assets and Liabilities
Considering the Diverse Financial Effects of Making a Profit
Reporting Extraordinary Gains and Losses
Correcting Common Misconceptions about Profit
Chapter 3: Assessing the Balance Sheet’s Asset Section
Homing in on Historic Cost
Discovering What Makes an Asset Current
Keeping Track of Noncurrent (Long-Term) Assets
Exploring the Asset Section of the Balance Sheet
Chapter 4: Digging for Debt in the Balance Sheet’s Liabilities Section
Seeing How Businesses Account for Liabilities
Keeping Current Liabilities under Control
Planning for Long-Term Obligations
Accounting for Bond Issuances
Chapter 5: Explaining Ownership in the Equity Section of the Balance Sheet
Understanding How Owner Equity Varies among Business Entities
Distinguishing between Two Types of Capital Stock
Defining Paid-In Capital
Recording Retained Earnings
Spotting Reductions to Stockholders’ Equity
Exploring Stock Splits
Computing Earnings per Share
Chapter 6: Coupling the Income Statement and Balance Sheet
Rejoining the Income Statement and Balance Sheet
Introducing Operating Ratios
Adding Fixed Assets, Depreciation, and Owners’ Equity
Completing the Balance Sheet with Debt
Book 5: Reporting on Your Financial Statements
Chapter 1: Presenting Financial Condition and Business Valuation
Clarifying the Values of Assets in Balance Sheets
Introducing Business Valuation
Comparing Business Valuation Methods
Chapter 2: Laying Out Cash Flows and Changes in Equity
Understanding the Difference between Cash and Profit
Realizing the Purpose of the Statement of Cash Flows
Walking through the Cash Flow Sections
Recognizing Methods for Preparing the Statement of Cash Flows
Interpreting the Statement of Cash Flows
Looking Quickly at the Statement of Changes in Stockholders Equity
Chapter 3: Analyzing Financial Statements
Judging Solvency and Liquidity
Understanding That Transactions Drive the Balance Sheet
Measuring Profitability
Exploring Activity Measures
Comparing Horizontal and Vertical Analysis
Using Common Size Financial Statements
Chapter 4: Reading Explanatory Notes and Disclosures
Realizing How Corporations Should Govern Themselves
Identifying Corporate Characteristics
Reviewing Common Explanatory Notes
Putting the Onus on the Preparer
Chapter 5: Studying the Report to the Shareholders
Why Private and Public Companies Treat Annual Reports Differently
Fulfilling Three Purposes
Reading the Annual Report to Shareholders
Walking through Form 10-K
Book 6: Planning and Budgeting for Your Business
Chapter 1: Incorporating Your Business
Securing Capital: Starting with Owners
Recognizing the Legal Roots of Business Entities
Incorporating a Business
Chapter 2: Choosing a Legal Structure for a Business
Differentiating between Partnerships and Limited Liability Companies
Going It Alone: Sole Proprietorships
Choosing the Right Legal Structure for Income Tax
Chapter 3: Drawing Up a Business Plan to Secure Cash
Outlining the Basic Business Plan
Developing a Business Plan
Incorporating Third-Party Information into Your Plan
Chapter 4: Budgeting for a Better Bottom Line
Brushing Up on Budgeting Basics
Recognizing Factors That Impact Your Budgeting Process
The Nuts and Bolts of Budgeting
Chapter 5: Mastering and Flexing Your Budgeting
Budgeting with Cash or Accrual Accounting
Budgeting to Produce the Income Statement and Balance Sheet
Flexing Your Budget: When Plans Change
Chapter 6: Planning for Long-Term Obligations
Managing Long-Term Debt
Accounting for Bonds
Book 7: Making Savvy Business Decisions
Chapter 1: Estimating Costs with Job Costing
Understanding How Job Costing Works
Taking a Closer Look at Indirect Costs by Using Normal Costing
Following the Flow of Costs through a Manufacturing System
Chapter 2: Performing Activity-Based Costing
Avoiding the Slippery Slope of Peanut Butter Costing
Designing an Activity-Based Costing System
Using Activity-Based Costing to Compute Total Cost, Profit, and Sale Price
Chapter 3: Examining Contribution Margin
Computing Contribution Margin
Preparing a Cost-Volume-Profit Analysis
Generating a Break-Even Analysis
Shooting for Target Profit
Observing Margin of Safety
Taking Advantage of Operating Leverage
Chapter 4: Accounting for Change with Variance Analysis
Setting Up Standard Costs
Understanding Variances
Teasing Out Variances
Chapter 5: Making Smart Pricing Decisions
Differentiating Products
Taking All Costs into Account with Absorption Costing
Pricing at Cost-Plus
Extreme Accounting: Trying Variable-Cost Pricing
Bull’s-Eye: Hitting Your Target Cost
Chapter 6: Using Financial Formulas
Analyzing Profitability
Using Assets Effectively
Evaluating Firm Liquidity
Checking on Company Solvency
Book 8: Handling Cash and Making Purchase Decisions
Chapter 1: Identifying Costs and Matching Costs with Revenue
Defining Costs and Expenses in the Business World
Satisfying the Matching Principle
Identifying Product and Period Costs
Discovering Which Costs Are Depreciated
Preparing a Depreciation Schedule
Deciding When to Recognize Revenue
Chapter 2: Exploring Inventory Cost Flow Assumptions
Discovering How Inventory Valuation Affects the Financial Statements
Logging Inventory for Service Companies
Classifying Inventory Types
Getting to Know Inventory Valuation Methods
Preparing an Inventory Worksheet
Chapter 3: Answering the Question: Should I Buy That?
Identifying Incremental and Opportunity Costs
Keeping It Simple: The Cash Payback Method
It’s All in the Timing: The Net Present Value (NPV) Method
Measuring Internal Rate of Return (IRR)
Considering Qualitative Factors
Chapter 4: Knowing When to Use Debt to Finance Your Business
Understanding the Basics of Debt Capital
Determining When Debt Is Most Appropriate
Using Loans, Leases, and Other Sources of Debt
Getting Creative with Capital
Chapter 5: Interpreting Your Financial Results as a Manager
Gauging the Relative Importance of Information
Reviewing Profit and Earnings
Judging the Company’s Cash Position
Tackling Extraordinary Gains and Losses
Recognizing the Risks of Restatement
Remembering the Limits of Financial Reports
Chapter 6: Handling the Financial End of a Business Sale
Maximizing Business Value
Becoming a Team Player
Funding a Business Purchase
Working through Due Diligence
Coming to Terms with a Sale Price
Book 9: Auditing and Detecting Financial Fraud
Chapter 1: Mulling Over Sarbanes-Oxley Regulation
Pre-SOX Securities Laws
The Scope of SOX: Securities and Issuers
The Post-SOX Paper Trail
Chapter 2: Preventing Cash Losses from Embezzlement and Fraud
Setting the Stage for Protection
Putting Internal Controls to Work
Recognizing Limitations of Internal Controls
Chapter 3: Assessing Audit Risk
Using the Audit Risk Model
Following Risk Assessment Procedures
Figuring Out What’s Material and What Isn’t
Evaluating Your Audit Risk Results
Chapter 4: Collecting and Documenting Audit Evidence
Management Assertions: Assessing the Information a Client Gives You
Eyeing the Four Concepts of Audit Evidence
Applying Professional Judgment
Using Your Audit Program to Request the Right Evidence
Documenting the Audit Evidence
Chapter 5: Auditing a Client’s Internal Controls
Defining Internal Controls
Identifying the Five Components of Internal Controls
Determining When You Need to Audit Internal Controls
Testing a Client’s Reliability: Assessing Internal Control Procedures
Limiting Audit Procedures When Controls Are Strong
Tailoring Tests to Internal Control Weaknesses
Timing a Client’s Control Procedures
Chapter 6: Getting to Know the Most Common Fraud Schemes
Frauds Committed by Businesses
Frauds Committed against Businesses
Chapter 7: Cooked Books: Finding Financial Statement Fraud
Exploring the Financial Statement Fraud Triangle
Spotting the Common Methods of Fraud
Uncovering Financial Statement Fraud
About the Authors
Connect with Dummies
Index
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