Financial Accounting for Dummies: 2nd Edition

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
Part 1 Getting a Financial Accounting Initiation
	Chapter 1 Seeing the Big Picture of Financial Accounting
		Knowing the Purposes of Financial Accounting
			Preparing financial statements
			Showing historic performance
			Providing results for the annual report
		Getting to Know Financial Accounting Users
			Identifying the most likely users
			Recognizing their needs
			Providing information for decision-making
		Respecting the Key Characteristics of Financial Accounting Information
			Relevance
			Reliability
			Comparability
			Consistency
		Accepting Financial Accounting Constraints
		Considering Your Ethical Responsibilities
			Following the accountant’s code of conduct
			Having integrity
			Maintaining objectivity
			Achieving independence
		Introducing the Conceptual Framework of Financial Accounting
	Chapter 2 Introducing the Big Three Financial Statements
		Gauging the Health of a Business through Its Financials
		Reporting Assets and Claims: The Balance Sheet
			Realizing why the balance sheet is “classified”
			Studying the balance sheet components
			Seeing an example of a classified balance sheet
		Posting Profit or Loss: The Income Statement
			Keeping a scorecard for business activity
			Studying the income statement components
			Seeing an example of an income statement
		Showing the Money: The Statement of Cash Flows
			Tracking sources and uses of cash
			Studying sections of the cash flow statement
			Seeing a short statement of cash flows
	Chapter 3 Running the Numbers for Success
		Identifying Accounting Issues and Solutions
		Selecting a Business Entity
			Advantages of the sole proprietorship
			Owners’ capital
			Limiting liability with the S Corporation
			Learning about recognition options
		Reporting for Small Businesses
			Preparing reports
			Analyzing reporting
			Identifying cost issues
		Managing Cash
			Identifying cost issues
			Improving cash flow
	Chapter 4 Acronym Alert! Setting the Standards for Financial Accounting
		Walking through the Origins of Number Crunching
		Knowing the Role of the American Institute of Certified Public Accountants (AICPA)
			ASB audit and attestation standards
			AICPA Code of Professional Conduct
		Following Regulatory Issues
			The U.S. Securities and Exchange Commission (SEC)
			The Sarbanes-Oxley Act of 2002 (SOX)
			The Public Company Accounting Oversight Board (PCAOB)
		Getting to Know the Financial Accounting Standards Board (FASB)
			Understanding generally accepted accounting principles (GAAP)
			Looking online for the FASB’s standards
Part 2 Reviewing Some Accounting Basics
	Chapter 5 Booking It: The Process Behind Financial Accounting
		Shedding Some Light on Bookkeeping
		Analyzing the Effect of Business Transactions
			Working the fundamental accounting equation
			Getting familiar with accounts
			Defining debits and credits
			Learning about the transaction methodology
		Defining Journals
			Using journals to record cash transactions
			Recording accrual transactions
			Learning about other journals
			Seeing 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
	Chapter 6 Focusing on Accounting Methods and Concepts
		Distinguishing between Key Accounting Methods
			The cash basis
			The accrual basis
		Sorting through Standards for Other Types of Accounting
			Managerial accounting
			Not-for-profit accounting
			Governmental accounting
			International accounting
		Considering the Conceptual Framework of Financial Accounting
			The objective of financial reporting
			Characteristics of accounting information
			Elements of the financial statements
			Financial statement measurements
Part 3 Spending Quality Time with the Balance Sheet
	Chapter 7 Assessing the Balance Sheet’s Asset Section
		Homing in on Historic Cost
		Learning What Makes an Asset Current
			Cash
			Short-term investments
			Accounts receivable
			Notes receivable
			Inventory
			Prepaid expenses
		Keeping Track of Noncurrent (Long-Term) Assets
			Meeting the tangibles: Property, plant, and equipment (PP&E)
			Investigating intangible assets
		Studying the Asset Section of the Balance Sheet
	Chapter 8 Digging for Debt in the Liabilities Section
		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
			Managing long-term debt
			Anticipating contingent liabilities
		Accounting for Bond Issuances
			Understanding bond basics
			Accounting for bonds sold at face value
			Addressing interest payments
			Getting and amortizing a premium
			Reporting a bond discount
			Retiring and converting bonds
	Chapter 9 Letting Owners Know Where They Stand: The Equity Section
		Distinguishing Different Types of Business Entities
			Sole proprietorship
			Partnership
			Corporate
		Defining Paid-in Capital
		Recording Retained Earnings
		Spotting Reductions to Stockholders’ Equity
			Paying dividends
			Buying treasury stock
		Learning about Stock Splits
		Accounting for Accumulated Other Comprehensive Income
		Seeing a Sample Equity Section of the Balance Sheet
Part 4 Investigating Income and Cash Flow
	Chapter 10 Searching for Profit or Loss on the Income Statement
		Presenting the Income Statement in One of Two Ways
			Recognizing the single-step format
			Breaking it out with the multiple-step format
		Defining Different Types of Businesses
			Providing a service
			Merchandising to the public
			Manufacturing a product
		Examining Income Statement Sections
			Two types of revenue
			Contra revenue accounts
			Cost of goods sold
			Gross profit
			Operating expenses
			Heading toward the bottom line
			Earnings per share
		Watching Out for Unusual Income Statement Items
			Discontinued operations
			Noncontrolling subsidiary interests
		Arriving at the Final Product
	Chapter 11 Following the Money by Studying Cash Flow
		Understanding the Difference between Cash and Profit
			Seeing how noncash transactions affect profit
			Distinguishing costs from expenses
		Realizing the Purpose of the Statement of Cash Flows
		Walking through the Cash Flow Sections
			Figuring cash operating results
			Showing cash investing transactions
			Accounting for financing activities
		Recognizing Methods for Preparing the Statement of Cash Flows
			Using the direct method
			Starting indirectly with net income
		Interpreting the Statement of Cash Flows
		Looking at Two Sample Statements of Cash Flows
	Chapter 12 Examining Depreciation Cost Flow Assumptions
		Discovering How Depreciation Affects All Financial Statements
		Mastering Costs
			Defining costs and expenses in the business world
			Satisfying the matching principle
			Identifying product and period costs
			Learning which costs are depreciated
		Distinguishing among Depreciation Methods
			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
		Preparing a Depreciation Schedule
	Chapter 13 Learning about Inventory Cost Flow Assumptions
		Discovering How Inventory Valuation Affects the Financial Statements
		Do Service Companies Have Inventory?
		Classifying Inventory Types
			Accounting for merchandising company inventory
			Accounting for manufacturing company inventory
		Getting to Know Inventory Valuation Methods
			Specific identification
			Weighted average
			First-in, first out (FIFO)
			Last-in, first-out (LIFO)
			Comparing inventory cost-flow assumptions
		Preparing an Inventory Worksheet
Part 5 Analyzing the Financial Statements
	Chapter 14 Using Ratios and Other Tools
		Learning about Liquidity Measurements
			Figuring the current ratio
			Putting the acid test to work
			Working with working capital
		Measuring Profitability
			Explaining trend analysis
			Focusing on return on investment
			Homing in on return on equity
		Exploring Activity Measures
			Accounts receivable turnover
			Inventory turnover
			Number of days’ sales in accounts receivable
		Analyzing Financial Statements
			Using horizontal analysis
			Comparing with vertical analysis
		Using Common Size Financial Statements
	Chapter 15 Got Your Dictionary Ready? Reading Explanatory Notes and Disclosures
		Realizing How Corporations Should Govern Themselves
		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 16 Studying the Report to the Shareholders
		Why Private and Public Companies Treat Annual Reports Differently
		Fulfilling Three Purposes
			Serving a marketing and PR function
			Stating financial performance and goals
			Meeting regulatory requirements
		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
			Getting to know key management and board members
		Walking through the Form 10-K
			Facing page: Identifying the affected company
			Part I: Learning more about the registrant
			Part II: Revealing the company’s financial performance
			Part III: Identifying management and corporate governance
			Part IV: Exhibits, financial statement schedules, and signature
Part 6 Feeling Brave? Tackling More Advanced Financial Accounting Topics
	Chapter 17 Accounting for Emerging Issues
		Reviewing Different Technological Effects on Financial Accounting
			Working in a digital world
			Discussing transitional recording
		Introducing the Pharmaceutical Industry
			Booking pharmaceutical transactions
		Crediting Research and Development Costs
			Walking through the background of research and development (R&D)
			Explaining the effect on relevant industries
			Realizing constraints for costs and expenses
			Reporting in the books
		Recognizing Losses
			Different types of business interruptions
			Properly expensing or accruing costs
	Chapter 18 Accounting for Income Taxes
		Identifying Financial Income versus Taxable Income
			Figuring out financial income
			Taking a look at taxable income
			Explaining why the two incomes differ
		Taking Advantage of Net Operating Losses
			Identifying loss carrybacks
			Understanding loss carryforwards
		Presenting a Side-by-Side Comparison of Book and Tax Calculations
		Taking Deferred Tax Liabilities or Assets to the Balance Sheet
	Chapter 19 Accounting for Leases
		Reviewing Lease Basics
			Identifying leasing advantages
			Introducing the lessor and lessee
		Accounting for the Lessee
			Looking at operating leases
			Walking through finance leases
			Presenting a finance lease on the financial statements
		Accounting for the Lessor
			Operating leases
			Direct financing leases
			Sales-type leases
	Chapter 20 Reporting Changes in Methods and the Correction of Errors
		Coping with Accounting Changes
			Reporting changes in accounting principles
			Changing a company’s estimates
			Understanding changes in reporting entities
		Dealing with Errors
			Reviewing common types of errors
			Letting counterbalancing errors lie
			Restating the financial statements
Part 7 The Part of Tens
	Chapter 21 Ten Financial Accounting Shenanigans
		Reporting Revenue in the Wrong Period
		Reporting Fictitious Income
		Increasing Income with Misleading Events
		Shifting Expenses Between Periods
		Misclassifying Cash
		Failing to Record Liabilities
		Reporting Liabilities in the Wrong Period
		Not Disclosing Related-Party Transactions
		Capitalizing Normal Operating Expenses
		Deleting Transactions
	Chapter 22 Ten Accounting Career Opportunities
		Certified Public Accountant
		Consultant
		Corporate Accountant
		Forensic Accountant
		Government Accountant
		Information Technology Auditor
		Income Tax Accountant
		International Accountant
		Non-Accounting Accountant
		Not-for-Profit Accountant
Index
EULA