Bookkeeping All-in-One For Dummies, 2nd Edition

Chapter 8

Accounting Alternatives

IN THIS CHAPTER

Realizing that there’s more than one way home

Examining the effects of alternative accounting methods on profit and balance sheet

Taking a closer look at cost of goods sold and depreciation expenses

Scanning the revenue and expense horizon

You may think that accountants are in unified agreement on the exact ways to record business transactions, but this isn’t the case. An old joke is that when two economists get together, they have three economic opinions. It’s not that different in accounting. Accountants have several methods that can be used for reporting revenue, expenses, and other transactions of a business. In this chapter, I look at those differences and the types of decisions accountants must make when recording transactions and filing financial reports.

The financial statements reported by a business are just one version of its financial history and performance. A different accountant for the business undoubtedly would have presented a different version. The income statement and balance sheet of a business depend on which ...