Understanding Business Accounting For Dummies, 2nd Edition
Read Understanding Business Accounting For Dummies, 2nd Edition Online
Authors: Colin Barrow,John A. Tracy
Tags: #Finance, #Business
BOOK: Understanding Business Accounting For Dummies, 2nd Edition
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- Introduction
- About This Book
- Conventions Used in Financial Reports
- Some Assumptions
- How This Book Is Organised
- Part I: Accounting Basics
- Part II: Getting a Grip on Financial Statements
- Part III: Accounting in Managing a Business
- Part IV: Financial Reports in the Outside World
- Part V: The Part of Tens
- Part VI: Appendixes
- Icons Used in This Book
- Where to Go from Here
- Part I
- Chapter 1: Introducing Accounting to Non-Accountants
- Accounting Everywhere You Look
- The Basic Elements of Accounting
- Accounting and Financial Reporting Standards
- The importance of GAAP and evolving accounting standards
- Why the GAAP rules are important
- Income tax and accounting rules
- Flexibility in accounting standards
- Enforcing Accounting Rules
- The Accounting Department: What Goes On in the Back Office
- Focusing on Business Transactions and Other Financial Events
- Taking a Closer Look at Financial Statements
- Accounting as a Career
- Chapter 2: Bookkeeping 101: From Shoe Boxes to Computers
- Bookkeeping versus Accounting
- Pedalling through the Bookkeeping Cycle
- Managing the Bookkeeping and Accounting System
- Categorise your financial information: The chart of accounts
- Standardise source document forms and procedures
- Don't be penny-wise and pound-foolish: The need for competent, trained personnel
- Protect the family jewels: Internal controls
- Keep the scale in balance with double-entry accounting
- Check your figures: End-of-period procedures checklist
- Keep good records: Happy audit trails to you!
- Look out for unusual events and developments
- Design truly useful accounting reports for managers
- Double-Entry Accounting for Non-Accountants
- The two-sided nature of a business entity and its activities
- Recording transactions using debits and credits
- Juggling the Books to Conceal Embezzlement and Fraud
- Chapter 3: Taxes, Taxes, and More Taxes
- Taxing Wages and Property
- Putting the government on the payroll: Employer taxes
- Taxing everything you can put your hands on: Property taxes
- 'Cause I'm the Tax Man: Value Added Tax
- Taxing Your Bottom Line: Company Taxes
- Chapter 4: Accounting and Your Personal Finances
- The Accounting Vice You Can't Escape
- The Ins and Outs of Figuring Interest and Return on Investment (ROI)
- An Accounting Template for Retirement Planning
- Part II
- Chapter 5: Profit Mechanics
- Swooping Profit into One Basic Equation
- Measuring the Financial Effects of Profit-Making Activities
- Exploring the Profit-Making Process One Step at a Time
- Making sales on credit
- Depreciation expense
- Unpaid expenses
- Prepaid expenses
- Stock (or Inventory) and cost of goods sold expense
- So Where's Your Hard-Earned Profit?
- Reporting Profit to Managers and Investors: The Profit and Loss Account
- Chapter 6: The Balance Sheet from the Profit and Loss Account Viewpoint
- Coupling the Profit and Loss Account with the Balance Sheet
- Sizing Up Assets and Liabilities
- Sales revenue and debtors
- Cost of goods sold expense and stock
- SA&G expenses and the four balance sheet accounts that are connected with the expenses
- Fixed assets and depreciation expense
- Debt and interest expense
- Income tax expense
- The bottom line: net profit (net income) and cash dividends (if any)
- Financing a Business: Owners' Equity and Debt
- Reporting Financial Condition: The Classified Balance Sheet
- Costs and Other Balance Sheet Values
- Growing Up
- Chapter 7: Cash Flows and the Cash Flow Statement
- The Three Types of Cash Flow
- Setting the Stage: Changes in Balance Sheet Accounts
- Getting at the Cash Increase from Profit
- Presenting the Cash Flow Statement
- Sailing through the Rest of the Cash Flow Statement
- Free Cash Flow: What on Earth Does That Mean?
- Scrutinising the Cash Flow Statement
- Chapter 8: Getting a Financial Report Ready for Prime Time
- Reviewing Vital Connections
- Statement of Changes in Owners' Equity and Comprehensive Income
- Making Sure that Disclosure Is Adequate
- Types of disclosures in financial reports
- Footnotes: Nettlesome but needed
- Other disclosures in financial reports
- Keeping It Private versus Going Public
- Nudging the Numbers
- Browsing versus Reading Financial Reports
- Part III
- Chapter 9: Managing Profit Performance
- Redesigning the External Profit and Loss Account
- Basic Model for Management Profit and Loss Account
- Travelling Two Trails to Profit
- First path to profit: Contribution margin minus fixed expenses
- Second path to profit: Excess over break-even volume contribution margin per unit
- Calculating the margin of safety
- Doing What-If Analysis
- Lower profit from lower sales - but that much lower?
- Violent profit swings due to operating leverage
- Cutting sales price, even a little, can gut profit
- Improving profit
- Cutting prices to increase sales volume: A very tricky game to play!
- Cash flow from improving profit margin versus improving sales volume
- A Final Word or Two
- Chapter 10: Business Budgeting
- The Reasons for Budgeting
- The modelling reasons for budgeting
- Planning reasons for budgeting
- Management control reasons for budgeting
- Other benefits of budgeting
- Budgeting and Management Accounting
- Budgeting in Action
- Developing your profit strategy and budgeted profit and loss account
- Budgeting cash flow from profit for the coming year
- Capital Budgeting
- Staying Flexible with Budgets
- Chapter 11: Choosing the Right Ownership Structure
- From the Top Line to the Bottom Line
- What Owners Expect for Their Money
- Companies
- Partnerships and limited partnerships
- Sole proprietorships
- Limited companies (Ltd) and public limited companies (plc)
- Choosing the Right Legal Structure for Tax Purposes
- Chapter 12: Cost Conundrums
- Previewing What's Coming Down the Road
- What Makes Cost So Important?
- Sharpening Your Sensitivity to Costs
- Direct versus indirect costs
- Fixed versus variable costs
- Breaking even
- Relevant versus irrelevant (sunk) costs
- Separating between actual, budgeted, and standard costs
- Product versus period costs
- Putting Together the Pieces of Product Cost for Manufacturers
- Minding manufacturing costs
- Allocating costs properly: Not easy!
- Calculating product cost
- Fixed manufacturing costs and production capacity
- Excessive production output for puffing up profit
- A View from the Top Regarding Costs
- Chapter 13: Choosing Accounting Methods
- Decision-Making Behind the Scenes in Profit and Loss Accounts
- Calculating Cost of Goods Sold and Cost of Stock
- Identifying Stock Losses: Net Realisable Value (NRV)
- Appreciating Depreciation Methods
- Collecting or Writing Off Bad Debts
- Reconciling Corporation Tax
- Two Final Issues to Consider
- Part IV
- Chapter 14: How Investors Read a Financial Report
- Financial Reporting by Private versus Public Businesses
- Analysing Financial Reports with Ratios
- Gross margin ratio
- Profit ratio
- Earnings per share, basic and diluted
- Price/earnings (P/E) ratio
- Dividend yield
- Book value per share
- Return on equity (ROE) ratio
- Current ratio
- Acid-test ratio
- Return on assets (ROA) ratio
- Frolicking through the Footnotes
- Checking for Ominous Skies on the Audit Report
- Finding Financial Facts
- Chapter 15: Professional Auditors and Advisers
- Why Audits?
- Who's Who in the World of Audits
- What an Auditor Does Before Giving an Opinion
- What's in an Auditor's Report
- Do Audits Always Catch Fraud?
- Auditors and GAAP
- From Audits to Advising
- Part V
- Chapter 16: Ten Ways Savvy Business Managers Use Accounting
- Make Better Profit Decisions
- Understand That a Small Sales Volume Change Has a Big Effect on Profit
- Fathom Profit and Cash Flow from Profit
- Govern Cash Flow Better
- Call the Shots on Your Management Accounting Methods
- Build Better Budgets
- Optimise Capital Structure and Financial Leverage
- Develop Better Financial Controls
- Minimise Tax
- Explain Your Financial Statements to Others
- Chapter 17: Ten Places a Business Gets Money From
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