Usually, accounting is understood as the Language of Business. However, a business may have a lot of aspects which may not be of financial nature. As such, a. Accountancy for ronaldweinland.info - Download as PDF File .pdf), Text File .txt) or read online. Accounting Basics. Important Disclaimer. Important Note: The text in this chapter is intended to clarify business-related concepts. It is not intended nor can it.
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Accounting FORDUMmIES‰4THEDITION Accounting FORDUMmIES‰ 4THEDITIONBy John A. Tracy, CPA Accounting. For Dummies, The Fast Forward MBA in Finance, How To Read a Financial Report, I hope I have done you proud with Accounting Workbook For Dummies. PDF Drive is your search engine for PDF files. As of today we have I hope I have done you proud with Accounting Workbook For Dummies. Financial.
Cost Accounting For Dummies Pdf The easy way to get a grip on cost accounting Critical in supporting strategic business decisions and improving profitability, cost accounting is arguably one of the most important functions in the accounting field. For business students, cost accounting is a required course for those seeking an accounting degree and is a popular elective among other business majors. Cost Accounting For Dummies tracks to a typical cost accounting course and provides in-depth explanations and reviews of the essential concepts you'll encounter in your studies: how to define costs as direct materials, direct labor, fixed overhead, variable overhead, or period costs; how to use allocation methodology to assign costs to products and services; how to evaluate the need for capital expenditures; how to design a budget model that forecast changes in costs based on expected activity levels; and much more. Tracks to a typical cost accounting course Includes practical, real-world examples Walks you though homework problems with detailed, easy-to-understand answers If you're currently enrolled in a cost accounting course, this hands-on, friendly guide gives you everything you need to master this critical aspect of accounting. We do not store files not owned by us, or without the permission of the owner. We also do not have links that lead to sites DMCA copyright infringement. If You feel that this book is belong to you and you want to unpublish it, Please Contact us.
But I think you get the idea that many different people need to understand the basics of accounting. Perhaps someone who leads an isolated contemplative life and renounces all earthly possessions does not need to know anything about accounting. How This Book Is Organized This book is divided into parts, and each part is further divided into chapters.
The following sections describe what you can find in each part. Part I: Opening the Books on Accounting In Chapters 1 and 2, I introduce the three primary business financial statements gradually, one step at a time.
Rather than throwing you in the deep end of the pool, hoping that you learn to swim before drowning in too many details, I make sure you first learn to float and then move on to some basic Introduction strokes. The information for financial statements comes from the bookkeeping system of the entity.
So, in Chapter 3, I offer a brief overview of bookkeeping and accounting systems. You could jump over this chapter, if you must. But I recommend at least a quick read. In Chapter 7, I explain that businesses are not in a straitjacket when it comes to deciding which accounting methods to use for recording their revenue and expenses. They can select from two or more equally acceptable methods for recording certain revenues and expenses. The choice of accounting methods affects the values recorded for assets and liabilities.
Part III: Accounting in Managing a Business To start a business and begin operations, its founders must first decide on which legal structure to use. Chapter 8 explains the legal entities for carrying on business activities. Each has certain advantages and disadvantages, and each is treated differently under the income tax law. Chapter 9 explains an extraordinarily important topic: designing an accounting report template that serves as a good profit model, one that focuses on the chief variables that drive profit and changes in profit.
A hands-on profit model is essential for decision-making analysis. A manager depends on the profit model to determine the effects of changes in sales prices, sales volume, product costs, and the other fundamental factors that drive profit.
In Chapter 10, I discuss accounting-based planning and control techniques, through the lens of budgeting.
Managers in manufacturing businesses should be wary of how product costs are determined, as Chapter 11 explains. The chapter also explains other economic and accounting cost concepts relevant to business managers. Next I discuss how investors and lenders read financial statements see Chapter Business managers need more information than is included in an external financial report to investors and lenders. In Chapter 14, I survey the additional information that managers need.
I close this part of the book with a chapter that explains audits of financial statements by CPAs and the very serious problems of accounting and financial reporting fraud see Chapter If there were no Enrons in the world, things would be a lot simpler.
I hate to say it, but the next Enron is just waiting to happen. Chapter 16 reviews ten important ways business managers should use accounting information. Chapter 17 gives business investors handy tips for getting the most out of reading a financial report — tips on how to be efficient in reading a financial report and the key factors to focus on.
Glossary The accounting terminology in financial statements is a mixed bag. Sometimes it must seem like accountants are speaking a foreign language. I must admit that accountants use jargon more than they should. In some situations accountants resort to arcane terminology to be technically correct, much like lawyers use arcane terminology in filing lawsuits and drawing up contracts.
Where I use jargon in the book, I pause and clarify what the terms mean in plain English. Also, I present a helpful glossary at the end of the book that can assist you on your accounting safari. This glossary provides quick access to succinct definitions of key accounting and financial terms, with relevant commentary and an occasional editorial remark. This is better than your average glossary.
Introduction Icons Used in This Book This icon points out especially important ideas and accounting concepts that are particularly deserving of your attention. The material marked by this icon describes concepts that are the undergirding and building blocks of accounting — concepts that you should be very clear about and that clarify your understanding of accounting principles in general.
I use this icon sparingly; it refers to very specialized accounting stuff that is heavy going, which only a CPA could get really excited about.
However, you may find these topics important enough to return to when you have the time. Feel free to skip over these points the first time through and stay with the main discussion. This icon calls your attention to useful advice on practical financial topics.
It saves you the cost of downloading a yellow highlighter pen. This icon is like a caution sign that warns you about speed bumps and potholes on the accounting highway. Taking special note of this material can steer you around a financial road hazard and keep you from blowing a fiscal tire. In short — watch out! You might start with Chapters 4, 5, and 6 which explain the three primary financial statements of businesses, and finish with Chapter 13 on reading a financial report.
You might jump right into Chapters 9 and 10, which explain the analysis of profit behavior and budgeting cash flows. The book is not like a five-course dinner in which you have to eat in the order the food is served to you. In this part, you find out why.
Accounting is equally vital in managing the business affairs of not-forprofit and governmental entities. From its accounting records, a business prepares its financial statements, its tax returns, and the reports to its managers. In financial reports to investors and lenders, a business must obey authoritative accounting and financial reporting standards. If not, its financial reports would be misleading and possibly fraudulent, which could have dire consequences.
Bookkeeping — the record-keeping part of accounting — must be done well to ensure that the financial information of a business is timely, complete, accurate, and reliable — especially the numbers reported in its financial statements and tax returns. Wrong numbers in financial reports and tax returns can cause all sorts of trouble. A ccounting is all about financial information — capturing it, recording it, configuring it, analyzing it, and reporting it to persons who use it.
But I talk a lot about how accountants communicate information in financial statements, and I explain the valuation methods accountants use — ranging from measuring profit and loss to putting values on assets and liabilities of businesses. As you go through life, you come face to face with accounting information more than you would ever imagine. Accounting information is presented on the assumption that you have a basic familiarity with the vocabulary of accounting and the accounting methods used to generate the information.
In short, most of the accounting information you encounter is not transparent. The main reason for studying accounting is to learn its vocabulary and valuation methods, so you can make more intelligent use of the information.
The purpose of this book is to make you a knowledgeable spectator of the accounting game. Let me point out another reason you should know accounting basics — I call it the defensive reason. A lot of people out there in the cold, cruel financial world may take advantage of you, not necessarily by illegal means but by withholding key information and by diverting your attention from unfavorable aspects of certain financial decisions.
These unscrupulous characters treat you as a lamb waiting to be fleeced. Accounting Is Not Just for Accountants One main source of accounting information is in the form of financial statements that are packaged with other information in a financial report.
Accountants keep the books and record the financial activities of an entity such as a business. From these detailed records the accountant prepares financial statements that summarize the results of the activities. Financial statements are sent to people who have a stake in the outcomes of the activities. If you own stock in General Electric, for example, or you have money in a mutual fund, you receive regular financial reports.
If you invest your hard-earned money in a private business or a real estate venture, or you save money in a credit union, you receive regular financial reports. In summary, one important reason for studying accounting is to make sense of the financial statements in the financial reports you get. I guarantee that Warren Buffett knows accounting and how to read financial statements.
Affecting both insiders and outsiders People who need to know accounting fall into two broad groups: insiders and outsiders. Business managers are insiders; they have the authority and responsibility to run a business. They need a good understanding of accounting terms and the methods used to measure profit and put values on assets and liabilities.
Chapter 1: Accounting: The Language of Business, Investing, Finance, and Taxes Accounting information is indispensable for planning and controlling the financial performance and condition of the business. Likewise, administrators of nonprofit and governmental entities need to understand the accounting terminology and measurement methods in their financial statements.
The rest of us are outsiders. We are not privy to the day-to-day details of a business or organization. Therefore, we need to have a good grip on the financial statements included in the financial reports. For all practical purposes, financial reports are the only source of financial information we get directly from a business or other organization. By the way, the employees of a business — even though they obviously have a stake in the success of the business — do not necessarily receive its financial reports.
Only the investors in the business and its lenders are entitled to receive the financial reports. Of course, a business could provide this information to those of its employees who are not shareowners, but generally speaking most businesses do not. The financial reports of public businesses are in the public domain, so their employees can easily secure a copy. However, financial reports are not automatically mailed to all employees of a public business.
In our personal financial lives, a little accounting knowledge is a big help for understanding investing in general, how investment performance is measured, and many other important financial topics.
Keep in mind that this is not a book on bookkeeping and recordkeeping systems. I offer a brief explanation of procedures for capturing, processing, and storing accounting information in Chapter 3. Even experienced bookkeepers and accountants should find some nuggets in that chapter.
However, this book is directed to users of accounting information. I focus on the end products of accounting, particularly financial statements, and not how information is accumulated.
Overcoming the stereotypes of accountants I recently saw a cartoon in which the young son of clowns is standing in a circus tent and is dressed as a clown, but he is holding a business briefcase.
He is telling his clown parents that he is running away to join a CPA firm.
Why is this funny? As a CPA and accounting professor for more than 40 years, I have met and known a large number of accountants. Most accountants are not as gregarious as used-car sales people though some are. Accountants certainly are more detail-oriented than your average person.
Accountants use very little math no calculus and only simple algebra. Accountants are very good at one thing: They want to see both sides of financial transactions: the give and take. If you walked down a busy street in Chicago, New York, or Los Angeles, I doubt that you could pick out the accountants. I have no idea whether accountants have higher or lower divorce rates than others, whether they go to church more frequently, whether most are Republicans or Democrats, or if they generally sleep well at night.
I do think that accountants are more honest in paying their income taxes than other people, although I have no proof of this. Well, a great deal of the information you use in making personal finance and investing decisions is accounting information.
You have a stake in the financial performance of the business you work for, the government entities you pay taxes to, the churches and charitable organizations you donate money to, the retirement plan you participate in, the businesses you download from, and the healthcare providers you depend on.
The financial performance and viability of these entities has a direct bearing on your personal financial life and well-being.
For example, as an employee your job security and your next raise depend on the business making a profit. If the business suffers a loss, you may be laid off or asked to take a reduction in pay or benefits. Business managers get paid to make profit happen. If the business fails to meet its profit objectives or suffers a loss, its managers may be replaced or at least not get their bonuses.
As an author, I hope my publisher continues to make profit so I can keep receiving my royalty checks. I hope the stores I trade with make profit and continue in business. The federal government and many states depend on businesses making profit to collect income taxes from them. When you sign a mortgage on your home, you should understand the accounting method the lender uses to calculate the interest amount charged on your loan each period.
The next day, however, Skilling admitted that a very significant reason for his departure was Enron's faltering price in the stock market.
He would apparently rely on a system of monopolies controlled or sponsored by government to make choices for people. We disagree, finding ourselves less trusting of the integrity and good faith of such institutions and their leaders. The example Mr. Krugman cites of " financialization " run amok the electricity market in California is the product of exactly his kind of system, with active government intervention at every step.
Indeed, the only winners in the California fiasco were the government-owned utilities of Los Angeles, the Pacific Northwest and British Columbia.
The disaster that squandered the wealth of California was born of regulation by the few, not by markets of the many. On August 15, Sherron Watkins , vice president for corporate development, sent an anonymous letter to Lay warning him about the company's accounting practices. One statement in the letter said: "I am incredibly nervous that we will implode in a wave of accounting scandals.
On August 22, Watkins met individually with Lay and gave him a six-page letter further explaining Enron's accounting issues. He also named Mark Frevert as vice chairman, and appointed Whalley and Frevert to positions in the chairman's office. Some observers suggested that Enron's investors were in significant need of reassurance, not only because the company's business was difficult to understand even "indecipherable"  but also because it was difficult to properly describe the company in financial statements.
He also explained that the complexity of the business was due largely to tax strategies and position-hedging.
In addition, the company admitted to repeatedly using "related-party transactions," which some feared could be too-easily used to transfer losses that might otherwise appear on Enron's own balance sheet. A particularly troubling aspect of this technique was that several of the "related-party" entities had been or were being controlled by CFO Fastow. In a statement, Lay said, "After a thorough review of our businesses, we have decided to take these charges to clear away issues that have clouded the performance and earnings potential of our core energy businesses.
David Fleischer at Goldman Sachs , an analyst termed previously 'one of the company's strongest supporters' asserted that the Enron management " They need to convince investors these earnings are real, that the company is for real and that growth will be realized.
In announcing Fastow's ouster, Lay said, "In my continued discussions with the financial community, it became clear to me that restoring investor confidence would require us to replace Andy as CFO. His first task was to deal with a cash crisis. A day earlier, Enron discovered that it was unable to roll its commercial paper , effectively losing access to several billion dollars in financing.
The company had actually experienced difficulty selling its commercial paper for a week, but was now unable to sell even overnight paper. Enron financed the re-download by depleting its lines of credit at several banks. While the company's debt rating was still considered investment-grade , its bonds were trading at levels slightly less, making future sales problematic.
Enron's tremendous presence worried some about the consequences of the company's possible bankruptcy.
It was reported at the time that Moody's and Fitch , two of the three biggest credit-rating agencies, had slated Enron for review for possible downgrade. Additionally, all manner of companies began reviewing their existing contracts with Enron, especially in the long term, in the event that Enron's rating were lowered below investment grade, a possible hindrance for future transactions.
Some feared that no one at Enron apart from Skilling and Fastow could completely explain years of mysterious transactions. Moody's also warned that it would downgrade Enron's commercial paper rating, the consequence of which would likely prevent the company from finding the further financing it sought to keep solvent.
Enron's board also announced that it would commission a special committee to investigate the transactions, directed by William C. Powers , the dean of the University of Texas law school. However, investors worried that the company would not be able to find a downloader.