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Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

Book Description

Your all-in-one accounting resource 

If you’re a numbers person, it’s your lucky day! Accounting jobs are on the rise — in fact, the Bureau of Labor Statistics projects a faster-than-average growth rate of 11% in the industry through 2024. So, if you’re seeking long-term job security while also pursuing your passion, you’ll be stacking the odds in your favor by starting a career in accounting.

Accountants don’t necessarily lead a solitary life behind a desk in a bank. The field offers opportunities in auditing, budget analysis, financial accounting, management accounting, tax accounting, and more. In Accounting All-in-One For Dummies, you’ll benefit from cream-of-the-crop content culled from several previously published books. It’ll help you to flourish in whatever niche you want to conquer in the wonderful world of accounting. You’ll also get free access to a quiz for each section of the book online.

  • Report on financial statements        
  • Make savvy business decisions
  • Audit and detect financial fraud
  • Handle cash and make purchasing decisions
  • Get free access to topic quizzes online

If you’re a student studying the application of accounting theories or a professional looking for a valuable desktop reference you can trust, this book covers it all.

Table of Contents

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