Rich Peterson - Accounting: Step-By-Step Guide to Master Bookkeeping and Accounting for Small Businesses

TABLE OF CONTENTS

A BOUT THIS BOOK

INTRODUCTION

CHAPTER ONE - ACCOUNTING: THE LANGUAGE OF BUSINESSES, INVESTMENTS, AND TAXES

ACCOUNTING IS NOT JUST FOR ACCOUNTANTS

ACCOUNTING SEARCH IN ALL THE GOOD PLACES

A GLANCE AT THE BACK OFFICE

FOCUSING ON TRANSACTIONS

CHAPTER TWO BOOKKEEPING AND ACCOUNTING SYSTEMS

BOOKKEEPING AND BEYOND

PEDALING THROUGH THE BOOKKEEPING CYCLE

BOOKKEEPING AND ACCOUNTING SYSTEM MANAGEMENT

DOUBLE-ENTRY ACCOUNTING FOR SINGLE-ENTRY INDIVIDUALS

MANAGING THE BOOKS TO CONCEAL FRAUD AND EMBEZZLEMENT

MAKING USE OF ACCOUNTING SOFTWARE

CHAPTER THREE FINANCIAL STATEMENT AND ACCOUNTING STANDARDS

PRESENTING THE INFORMATION CONTENT OF THE FINANCIAL STATEMENTS

THE INCOME STATEMENT

THE BALANCE SHEET

CASH FLOW STATEMENTS

DIFFERENCE BETWEEN PROFIT AND CASH FLOW FROM PROFIT

GLEANING THE MAIN INFORMATION FROM THE FINANCIAL STATEMENTS

KEEPING IN STEP WITH FINANCIAL REPORTING AND ACCOUNTING STANDARDS

TAKING NOTE OF A DIVISION BETWEEN PUBLIC AND PRIVATE COMPANIES

CHAPTER FOUR ACCOUNTING EQUATION AND ITS SIGNIFICANCE

ACCOUNTING EQUATION

CALCULATION OF THE EQUATION

LEARNING FROM THE EQUATION

ACCOUNTING EQUATION PROBLEM

THE DOUBLE-ENTRY SYSTEM

HOW TO READ AND UNDERSTAND THE FINANCIAL STATEMENTS

10 TIPS FOR READING A FINANCIAL REPORT

CHAPTER FIVE - FINANCIAL RATIO ANALYSIS AND INTERPRETATION

ANALYSIS AND INTERPRETATION OF FINANCIAL RATIOS

FINANCIAL RATIO ANALYSIS TUTORIAL

GENERAL ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

GAAP COMPLIANCE

HOW TO MAKE JOURNAL ENTRIES IN ACCOUNTING

CASH BASIS ACCOUNTING, VS. ACCRUAL ACCOUNTING

CALCULATING DEPRECIATION & AMORTIZATION

CHAPTER SIX - ACCOUNTING CAREER OPTIONS

WHO IS AN ACCOUNTANT, AND WHAT DOES ACCOUNTANT DO?

CAREERS IN DIFFERENT ACCOUNTING AREAS

MANAGEMENT ACCOUNTING

INTERNAL AUDITING

PUBLIC ACCOUNTING

GOVERNMENT ACCOUNTING

FINANCIAL ACCOUNTING VS. MANAGEMENT ACCOUNTING

WRITING YOUR ACCOUNTING RESUME

ABOUT THIS BOOK

T his book is made up of independent chapters. You can read the chapters in order of your choice. You can adapt your reading plan to prioritize the chapters that interest you and read other chapters if time permits. Obviously, you can start on page 1 and continue to the last page. The choice is yours.

I wrote this book for a large audience. You can be an owner of a small business who already has experience with financial statements, for example, but you need to know more about how to use accounting information to analyze your profits and cash performance. Or you can be an investor who needs to know more about the financial statements; therefore, your main interest is probably the chapters that explain these statements.

I must emphasize one thing: this book is not an accounting textbook. The introductory accounting books are heavy, dry as dust, and too detailed. However, textbooks have an advantage: they include exercises and problems. You can learn a lot by reading this book.

INTRODUCTION

Y ou can meet people who make a living as accountants. You can be thankful that they are the accountants, and you are not. You may prefer to leave the accounting to the accountants and think that you have nothing to know about accounting. Well, if you could go where you wanted to go by bus, that's fine. But if you have to drive in most places, it is best to know the automobiles. You perform a lot of "financial driving," so you also need to know something about accounting.

Of course, accounting involves numbers. So, watch the mileage of your car, know your vital health statistics, keep track of your bank balance, negotiate the interest rate on your mortgage, and watch your retirement funds. You deal with numbers all the time. The accountants provide financial figures. These numbers are essential in your financial life. Knowing nothing about the financial numbers puts you at a very disadvantaged. In short, financial literacy involves a working knowledge of accounting.

New commercial activities, whether manufacturing, maintenance, or commerce, involve monetary transactions. Ultimately, if the total amount received is greater than the total amount spent, the business would have generated a "surplus" or "profit." Otherwise, the business would be in deficit or loss. Every business wants to generate a surplus or a profit.

Several transactions take place in the course of business. It is almost impossible to remember all of them. Therefore, a business must record all of these transactions in order to find out the result of commercial activity. A methodical and systematic science has been developed, which helps the promoter to correctly record all economic transactions and to know the result of trade negotiations. This science is called "financial accounting."

Accounting is a name given to the system that measures, records, analyzes, and reports on the effect of transactions and business events taking place in a business enterprise. Since these reports are in financial units, the system is also called financial accounting. It has been defined as the art and science of recording business transactions in a methodical way in order to show (a) the true situation of a business at a given time, and b) the excess or deficiency accumulated during a specified period.

Thus, financial accounting involves (a) recording the data, and (b) the data presentation technique used to record various transactions. This is called "accounting." The recorded data are summarized and systematically organized and presented to different users in the form of financial statements.