ACCOUNTING ALL-IN-ONE FOR DUMMIES

Title Page
Copyright Page
Table of Contents
Introduction
	About This Book
	Foolish Assumptions
	Icons Used in This Book
	Beyond the Book
	Where to Go from Here
Book
1 Accounting for Financial Systems
	Chapter 1 Accounting for the Basics
		Knowing What Bookkeeping and Accounting Are All About
			Distinguishing between bookkeeping and accounting
			Taking a panoramic view of bookkeeping and accounting
		Wrapping Your Brain around the Accounting Cycle
		Working the Fundamental Accounting Equation
	Chapter 2 Charting Your Accounts
		Navigating the Chart of Accounts
		Setting Up Your Chart of Accounts
		Giving Credit (Or Is It Debit?)
		Understanding Double-Entry Accounting
			Conquering the balance sheet equation
			Recording journal entries
			Writing a complex journal entry
	Chapter 3 Using Journal Entries and Ledgers
		Keeping a Journal
			Using journals to record cash transactions
			Recording accrual transactions
			Exploring other journals
			Checking out examples of common journal entries
		Bringing It All Together in the Ledger
			Realizing what a ledger is
			Posting to the ledgers
			Viewing an example of a general ledger
			Recognizing the purpose of the trial balance
		Putting Accounting Software to Work for You
	Chapter 4 Choosing an Accounting Method
		Choosing Your Method
			The cash method
			The accrual method
			The hybrid method
		Sorting through Standards for Other Types of Accounting
			Financial accounting
			Managerial and cost accounting
			Not-for-profit accounting
			Governmental accounting
			Forensic accounting
			Public accounting
	Chapter 5 Setting the Standards
		Exploring the Origins of Accounting Standards
		Recognizing the Role of the American Institute of Certified Public Accountants
			Tying together regulators for audits of publicly traded companies
			Navigating ASB audit and attestation standards
			Observing the AICPA Code of Professional Conduct
		Checking Out the U.S. Securities and Exchange Commission
		Getting to Know the Financial Accounting Standards Board
			Understanding generally accepted accounting principles
			Looking online for FASB standards
			Picking a standard: Domestic or international
		Grasping Accounting Standards Around the Globe
Book
2 Recording Transactions
	Chapter 1 Keeping the Books
		Analyzing the Effect of Business Transactions
			Approaching the fundamental accounting equation
			Getting familiar with accounts
			Defining debits and credits
			Knowing more about the transaction methodology
		Managing Your Bookkeeping and Accounting System
			Categorizing your financial information: The chart of accounts
			Standardizing source document forms and processing procedures
			Hiring competent personnel
			Enforcing strong internal controls
		Wrapping Up with End-of-Period Procedures
			Tidying up the books
			Leaving good audit trails
			Staying alert for unusual events and developments
			Designing truly useful reports for managers
	Chapter 2 Tracking Purchases
		Keeping Track of Inventory
			Entering initial cost
			Managing inventory and its value
		Buying Supplies
		Handling Billing and Payables
	Chapter 3 Tallying Your Sales
		Collecting on Cash Sales
			Discovering the value of sales receipts
			Recording cash transactions in the books
		Selling on Credit
			Deciding whether to offer store credit
			Recording store credit transactions in the books
		Proving Out the Cash Register
		Tracking Sales Discounts
		Recording Returns and Allowances
		Monitoring Accounts Receivable
		Accepting Your Losses
	Chapter 4 Processing Employee Payroll and Benefits
		Staffing Your Business
			Completing government forms
			Picking pay periods
			Determining wage and salary types
		Collecting Employee Taxes
			Sorting out Social Security tax
			Making sense of Medicare tax
			Figuring out federal withholding tax
			Settling up state and local withholding taxes
		Determining Net Pay
		Surveying Your Benefits Options
			Tax-exempt benefits
			Taxable benefits
			Cafeteria plans
		Preparing Payroll and Posting It in the Books
			Calculating payroll for hourly employees
			Doling out funds to salaried employees
			Totaling up for commission checks
			Putting it together to prepare payroll
		Depositing Employee Taxes
	Chapter 5 Taxing Payrolls
		Paying Employer Taxes on Social Security and Medicare
			Filing Form 941
			Knowing how often to file
		Completing Unemployment Reports and Paying Unemployment Taxes
			Figuring out how states calculate the FUTA tax rate
			Calculating FUTA tax
			Filing and paying unemployment taxes to state governments
		Carrying Workers’ Compensation Insurance
		Maintaining Employee Records
Book
3 Adjusting and Closing Entries
	Chapter 1 Depreciating Your Assets
		Appreciating Depreciation
			Knowing what you can and can’t depreciate
			Figuring out the useful life of a fixed asset
			Delving into cost basis
		Comparing Depreciation Options
			Walking through the straight-line method
			Accelerating by using declining balance
			Calculating sum-of-the-years’-digits
			Using the units-of-production method
			Seeing how the methods compare
			Figuring partial year depreciation
		Tackling Taxes and Depreciation
			Section 179
			MACRS
	Chapter 2 Interesting Rates
		Deciphering Types of Interest
			Simple interest
			Compound interest
			Hybrid interest
		Handling Interest Income
		Delving into Loans and Interest Expenses
			Short-term debt
			Long-term debt
	Chapter 3 Proving Out Cash
		Making Sure That Ending Cash Is Right
		Closing the Cash Journals
			Finalizing cash receipts
			Finalizing cash outlays
		Using a Temporary Posting Journal
	Chapter 4 Reconciling Accounts and Closing Journal Entries
		Reconciling Bank Accounts
			Tracking down reconciling items
			Using a computerized system
			Posting Adjustments and Corrections
		Prepping to Close: Checking for Accuracy and Tallying Things Up
			Paying attention to initial transaction details
			Summarizing journal entries
			Analyzing summary results
			Planning for cash flow
		Posting to the General Ledger
		Checking Out Computerized Journal Records
	Chapter 5 Checking Your Accuracy
		Working with a Trial Balance
			Conducting your trial balance
			Dealing with trial balance errors
		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
			Depreciating assets
			Allocating prepaid expenses
			Counting inventory
			Allowing for bad debts
			Recognizing unpaid salaries and wages
		Testing an Adjusted Trial Balance
Book
4 Preparing Income Statements and Balance Sheets
	Chapter 1 Stating Your Income
		Understanding the Nature of Profit
		Choosing the Income-Statement Format
		Deciding What to Disclose in the Income Statement
			Considering expense disclosure
			Presenting the right amount of expense information
		Examining How Sales and Expenses Change Assets and Liabilities
			Sizing up a business’s financial condition
			Noting how accounting transactions affect the income statement and balance sheet
		Considering the Diverse Financial Effects of Making a Profit
			Introducing T-accounts
			Combining activity into one journal entry
			Explaining additional transactions related to profit
		Reporting Extraordinary Gains and Losses
			Segregating the income statement
			Considering business disruptions
			Questioning whether activity is truly unusual
		Correcting Common Misconceptions about Profit
			Clearing up profit misconceptions
			Comparing with industry standards
			Waving the red flag when you see revenue and credit sales increase
	Chapter 2 Balancing Your Sheets
		Homing in on Historic Cost
		Discovering What Makes an Asset Current
			Cash
			Short-term investments
			Accounts receivable
			Notes receivable
			Inventory
			Meeting the tangibles: Property, plant, and equipment
			Investigating intangible assets
		Exploring the Asset Section of the Balance Sheet
	Chapter 3 Digging for Debt in the Balance Sheet
		Seeing How Businesses Account for Liabilities
		Keeping Current Liabilities under Control
			Accounts payable
			Payroll and taxes
			Unearned revenue
			Other short-term liabilities
		Planning for Long-Term Obligations
			Financing asset purchases with debt versus equity
			Managing long-term debt
			Anticipating contingent liabilities
		Accounting for Bond Issuances
			Mulling over bond basics
			Examining sample bond transactions
			Journaling bond transactions
	Chapter 4 Explaining Equity
		Understanding How Owner Equity Varies among Business Entities
			Sole proprietorship
			Partnership
			Corporation
		Distinguishing between Two Types of Capital Stock
			Looking into preferred stock
			Considering common stock
			Recording stock transactions on the balance sheet
		Defining Paid-In Capital
		Recording Retained Earnings
		Spotting Reductions to Stockholders’ Equity
			Paying dividends
			Buying back shares: Treasury stock
		Exploring Stock Splits
		Computing Earnings per Share
			Simple capital structure
			Complex capital structure
	Chapter 5 Interpreting Income Statements and Balance Sheets
		Rejoining the Income Statement and Balance Sheet
			Seeing connections between accounts
			Using transactions to explain the connections
		Introducing Operating Ratios
			Comparing expected with actual operating ratios
			Generating balance sheet amounts by using ratios
		Adding Fixed Assets, Depreciation, and Owners’ Equity
			Dealing with fixed assets and depreciation
			Tacking on owners’ equity
		Completing the Balance Sheet with Debt
			Going over the debt section of the balance sheet
			Tying in the new equity section
Book 
5 Reporting Your Statements
	Chapter 1 Valuating Finances
		Clarifying the Values of Assets in Balance Sheets
			Considering options for balance sheet valuation
			Comparing two balance sheet valuations
		Introducing Business Valuation
			Grasping the practical applications of business valuations
			Getting CVA-certified
		Comparing Business Valuation Methods
			Replacing values
			Using future earnings and cash flow
	Chapter 2 Watching Cash Flow and Equity
		Understanding the Difference between Cash and Profit
			Seeing how noncash transactions affect profit
			Distinguishing costs from expenses
		Flowing Through Cash Transactions
		Navigating the Three Flows
			Figuring cash operating results
			Showing cash investing transactions
			Accounting for financing activities
		Preparing the Statement of Cash Flows
			Using the direct method
			Starting indirectly with net income
		Interpreting the Statement of Cash Flows
		Stating Changes in Stockholders’ Equity
	Chapter 3 Analyzing Financial Statements
		Judging Solvency and Liquidity
			Understanding the risks of late payments
			Recognizing current assets and liabilities
			Brushing up on current and quick ratios
		Driving the Balance Sheet
			Analyzing three types of balance sheet transactions
			Reviewing changes in balance sheet accounts
		Measuring Profitability
			Understanding trend analysis
			Focusing on return on investment
			Homing in on return on equity
		Exploring Activity Measures
			Accounts receivable turnover
			Inventory turnover
		Comparing Horizontal and Vertical Analysis
			Using horizontal analysis
			Implementing vertical analysis
		Using Common Size Financial Statements
	Chapter 4 Explaining Disclosures
		Questioning Self-Governance
		Identifying Corporate Characteristics
		Reviewing Common Explanatory Notes
			Leveling the playing field among financial statements
			Explaining significant accounting policies
			Looking for important-event disclosures
		Putting the Onus on the Preparer
	Chapter 5 Sharing Public Reports
		Differentiating between Private and Public Companies
		Finding Purpose in Reports
			Meeting regulatory requirements
			Stating financial performance and goals
			Marketing and PR messages
		Reading the Annual Report to Shareholders
			Meeting the chair of the board of directors
			Highlighting key financial data
			Touting company achievements
			Looking into the future
			Meeting management
		Walking through Form 10-K
			Facing page: Identifying the affected company
			Part I: Finding out more about the registrant
			Part II: Revealing the company’s financial performance
			Part III: Identifying management and corporate governance
			Part IV: Exhibiting evidence
Book
6 Planning and Budgeting for Your Business
	Chapter 1 Looking at the Legals
		Surveying Structures
			Partnering up
			Looking at the LLC
			Limiting liability: Professional corporations and LLPs
			Understanding how partnerships and LLCs distribute profits
		Going It Alone: Sole Proprietorships
			Describing a sole proprietorship
			Understanding liability and financial reporting
		Choosing the Right Legal Structure for Income Tax
			C corporations
			S corporations
			Partnerships and LLCs
			The legal structure issue
	Chapter 2 Incorporating Your Business
		Securing Capital: Starting with Owners
			Contrasting two sources of equity
			Leveraging equity capital with debt
		Recognizing Legal Roots
		Incorporating a Business
			Issuing stock shares
			Offering different classes of stock shares
			Determining the market value of stock shares
			Keeping alert for dilution of share value
			Recognizing conflicts between stockholders and managers
	Chapter 3 Drawing Up a Business Plan
		Outlining the Basic Business Plan
			The executive summary
			The market assessment
			The operational overview
			The financial summary: Performance and required capital
		Developing a Business Plan
			Recognizing the evolution of business plans: BOTE, WAG, and SWAG
			Taking a problem-solving approach
			Getting the process going
			Analyzing and streamlining information with SWOT and KISS
		Incorporating Third-Party Information into Your Plan
			Gathering the info
			Riding the CART concept: Complete, accurate, reliable, and timely
	Chapter 4 Budgeting for a Better Bottom Line
		Brushing Up on Budgeting
			Meeting the master budget
			Understanding key budgeting concepts
			Planning strategically
		Recognizing Factors That Affect Your Budgeting Process
			Experience counts
			Timing is everything
			People get you headed in the right direction
			Sales projections pay off
		Understanding Budgeting Basics
			Sourcing funds
			Using the balance sheet
			Working with the income statement
			Analyzing the statement of cash flows
		Reviewing Revenue and Production Budgets
			Applying the revenue formula
			Using the inventory formula
			Assessing cost of goods sold
	Chapter 5 Mastering Budgeting Strategies
		Budgeting with Cash or Accrual Accounting
			Accounting for cash
			Accruing experience
		Budgeting to Produce the Income Statement and Balance Sheet
			Well-balanced sheets
			The incredible income statement
		Flexing Your Budget: When Plans Change
			Controlling your business
			Dealing with budget variances
			Implementing a flexible budget
	Chapter 6 Planning for Long-Term Obligations
		Managing Long-Term Debt
			The many faces of notes payable
			Treasury bonds defined
			The dark side of debt-free
		Accounting for Bonds
			Valuing bonds payable
			Figuring out the present value of a bond
			Issuing at face value
Book
7 Making Savvy Business Decisions
	Chapter 1 Costing Jobs
		Understanding How Job Costing Works
			Objecting to costs
			Charging customers for direct and indirect costs
			Implementing job costing in manufacturing
		Taking a Closer Look at Indirect Costs by Using Normal Costing
			Budgeting for indirect costs
			Following a normal job costing system
		Following the Flow of Costs through a Manufacturing System
			Managing costs with control accounts
			Applying the methodology to other control accounts
	Chapter 2 Costing by the ABCs
		Avoiding the Slippery Slope of Peanut Butter Costing
			Recognizing a single indirect cost allocation
			Finding a fly in the peanut butter: Dealing with different levels of client activity
			Undercosting and overcosting
		Designing an Activity-Based Costing System
			Refining your approach
			Grouping costs by using a cost hierarchy
			Testing your ABC design
		Using Activity-Based Costing to Compute Total Cost, Profit, and Sale Price
			Allocating indirect costs evenly by product
			Analyzing and reallocating cost activities
			Changing allocations to cost pools
			Changing prices after ABC
	Chapter 3 Contributing to the Margin
		Computing Contribution Margin
			Figuring total contribution margin
			Calculating contribution margin per unit
			Working out contribution margin ratio
		Preparing a Cost-Volume-Profit Analysis
			Drafting a cost-volume-profit graph
			Trying out the total contribution margin formula
			Practicing the contribution margin per unit formula
			Eyeing the contribution margin ratio formula
		Generating a Break-Even Analysis
			Plotting the break-even point
			Using the formula approach
		Shooting for Target Profit
		Setting a Margin of Safety
			Using a graph to depict margin of safety
			Calculating the margin of safety
		Measuring Operating Leverage
			Graphing operating leverage
			Looking at the operating leverage formula
	Chapter 4 Accounting for Change with Variance Analysis
		Setting Up Standard Costs
			Establishing direct materials standards
			Determining direct labor standards
			Calculating the overhead rate
			Adding up standard cost per unit
		Understanding Variances
			Computing direct materials variances
			Calculating direct labor variances
			Computing overhead variances
		Teasing Out Variances
			Interpreting variances in action
			Focusing on the big numbers
			Tracing little numbers back to big problems
	Chapter 5 Pricing Wisely
		Differentiating Products
		Taking All Costs into Account with Absorption Costing
		Pricing at Cost Plus
			Computing fixed markups
			Setting a cost-plus percentage
			Considering problems with cost-plus pricing
		Accounting Extremes: Trying Variable-Cost Pricing
			Working out variable-cost pricing
			Spotting the hazards of variable-cost pricing
		Hitting the Bull’s-Eye (Your Target Cost)
			Calculating your target cost
			Transferring price
			Outsourcing decisions
	Chapter 6 Formulating Equations
		Analyzing Profitability
		Using Assets Effectively
		Evaluating Firm Liquidity
			Monitoring your checkbook
			Liquidating assets to collect cash
		Checking on Company Solvency
		Managing Projects and Debt
Book
8 Handling Cash and Making Purchase Decisions
	Chapter 1 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
			Handling real property depreciation
			Allocating costs between land and buildings
			Expensing repairs and maintenance
		Preparing a Depreciation Schedule
		Deciding When to Recognize Revenue
			Going over the revenue recognition principle
			Recognizing revenue and cash flow
	Chapter 2 Exploring Inventory Cost Flows
		Stating Inventory Valuation
			Comparing merchandising and manufacturing companies
			Translating inventory into revenue
		Logging Inventory for Service Companies
		Classifying Inventory Types
			Accounting for merchandising company inventory
				Perpetual system
				Periodic system
			Accounting for manufacturing company inventory
				Direct material inventory
				Work-in-process inventory
				Finished goods inventory
		Knowing Inventory Valuation Methods
			Understanding guidelines used for all methods
			Comparing inventory cost-flow assumptions
		Preparing an Inventory Worksheet
	Chapter 3 Buying Wisely
		Identifying Incremental and Opportunity Costs
		Keeping Things Simple: The Cash Payback Method
			Using the cash payback method with equal annual net cash flows
			Applying the cash payback method when annual net cash flows change each year
		Netting Present Value
			Calculating time value of money with one payment for one year
			Finding time value of money with one payment held for two periods or more
			Calculating net present value with a series of future cash flows
		Measuring Internal Rate of Return
		Considering Qualitative Factors
	Chapter 4 Financing with Debt
		Understanding the Basics of Debt Capital
			Debt maturity
			Debt security
			Other debt attributes
		Determining When Debt Is Most Appropriate
			When you can offer security or collateral
			When business is stable
			When you have financial strength
		Using Loans, Leases, and Other Sources of Debt
			Borrowing from banks
			Making friends with asset-based lenders
			Leasing as a source of capital
			Tapping government programs
			Using other sources of debt-based capital
		Getting Creative with Capital
			Generating internal cash flow
			Leveraging unsecured creditors
			Going after government aid, gifts, and grants
			Partnering up
			Crowdfunding
	Chapter 5 Managing Results
		Approaching Financial Reports
		Reviewing Profit and Earnings
			Judging profit performance
			Testing earnings per share against change in bottom line
		Judging the Company’s Cash Position
			Comparing net income to cash flow
			Considering solvency
		Tackling Extraordinary Gains and Losses
		Recognizing the Risks of Restatement
	Chapter 6 Acquiring New Business
		Maximizing Business Value
			Attending to financial and nonfinancial factors
			Evaluating business operations
			Reviewing products, services, and training
			Attending to issues that can sink the sale
		Becoming a Team Player
		Funding a Business Purchase
		Working through Due Diligence
			Mulling over your accounting system
			Having your accounting system audited
			Having an attorney review contracts and other agreements
		Coming to Terms with a Sale Price
			Comparing an asset purchase with an equity purchase
			Normalizing the financial statements
			Factoring in industry and economic conditions
			Securing a win–win sale price
Book
9 Auditing for Financial Fraud
	Chapter 1 Regulating Securities
		Early Securities Laws
			The Securities Act of 1933: Arming investors with information
			The Securities Exchange Act of 1934: Establishing the SEC
				Overview of the 1934 Act
				Private placement under Regulation D
				Powers given to the SEC
				The SEC’s rulemaking authority for SOX
				Periodic reporting under the 1934 Act
				Insider trading provisions
			Other securities laws
		The Scope of SOX: Securities and Issuers
			Determining what a security is
			Defining an issuer
			Figuring out how stock exchanges work
			Unveiling the SOX surprise
			Some universal SOX provisions
		The Post-SOX Paper Trail
			Form 10-K
			Form 10-Q
			Form 8-K
	Chapter 2 Preventing Cash Losses from Embezzlement and Fraud
		Preventing Loss with Internal Controls
			Weighting internal control costs and benefits
			Understanding collusion
			Recognizing the dual purpose of internal accounting controls
			Segregating duties to prevent theft
			Struggling with fraud committed by the business
			Considering fraud committed by the business
			Considering external auditors and detecting fraud
		Putting Internal Controls to Work
			Going down the internal controls checklist
			Considering some important details of internal control
		Recognizing Limitations of Internal Controls
			Keeping internal controls under control
			Finding fraud that slips through the net
	Chapter 3 Assessing Audit Risk
		Introducing Audit Risk
		Recognizing the Nature of a Client’s Business: Inherent Risk
			Environment and external factors
			Previous-period misstatements
			Susceptibility to theft or fraud
		Assessing a Client’s Ability to Detect and Correct Problems: Control Risk
		Figuring Your Chances of Overlooking Inaccuracies: Detection Risk
			Changing the audit risk model formula
			Considering detection risk and sampling
			Going over elements of detection risk
		Following Risk Assessment Procedures
			Recognizing the nature of the company
			Examining the quality of company management
			Asking employees for information
			Analyzing processes and paperwork
			Observing the client at work
		Figuring Out What’s Material and What Isn’t
			Distinguishing errors from fraud
			Explaining the triangle of fraud
		Evaluating Your Audit Risk Results
			Tailoring the audit to a low-risk situation
			Responding to a high-risk assessment
			Documenting audit risk results
	Chapter 4 Discovering Audits
		Management Assertions: Assessing the Information a Client Gives You
			Defining financial statement presentation and disclosure
			Monitoring classes of transactions
			Analyzing account balances
		Eyeing the Four Concepts of Audit Evidence
			The nature of the audit evidence
			The competence of the audit evidence
			The sufficiency of the audit evidence
			The evaluation of the audit evidence
		Applying Professional Judgment
			Exercising skepticism
			Brainstorming with audit team members
		Using Your Audit Program to Request the Right Evidence
		Documenting the Audit Evidence
			Types of documentation
			Ownership and retention of the audit documentation
	Chapter 5 Auditing Internal Controls
		Defining Internal Controls
		Identifying the Five Components of Internal Controls
		Determining When You Need to Audit Internal Controls
			Defining substantive strategy and control testing strategy
			Figuring out which strategy is best
		Testing a Client’s Reliability: Assessing Internal Control Procedures
			Considering external factors
			Evaluating how management assesses its controls
			Using questionnaires to evaluate internal controls
			Designing your tests of controls
			Using sampling to test internal controls
			Knowing when internal controls are sound or flawed
			Documenting your conclusion
		Limiting Audit Procedures When Controls Are Strong
		Tailoring Tests to Internal Control Weaknesses
		Timing a Client’s Control Procedures
			Setting a timeline for the client
			Conducting interim versus year-end audits
	Chapter 6 Scheming Scams
		Frauds Committed by Businesses
			Preying on vulnerable populations
			Picking investors’ pockets
			Doing business with bribes
			Laundering money
			Perpetrating construction fraud
			Dealing in subprime and predatory lending
			Taking advantage of employees
		Frauds Committed against Businesses
			Employee theft
			Vendor and customer fraud
			Insurance fraud
			Real estate and mortgage fraud
	Chapter 7 Cooking the Books
		Exploring the Financial Statement Fraud Triangle
			Understanding the incentive behind financial statement fraud
			Seeing the fraud opportunity
			Coming up with a rationalization for the fraud
		Spotting the Common Methods of Fraud
			Hidden liabilities
			Cookie jar reserves
			Off-balance-sheet transactions
			Notes no one can comprehend
		Uncovering Financial Statement Fraud
			Comparative techniques
			Ratio analysis
			Beneish model
			Data mining
Index
EULA