John A. Tracy - Accounting For Dummies

Accounting For Dummies, 6th edition

Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com

Copyright 2016 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

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Library of Congress Control Number: 2016941497

ISBN 978-1-119-24548-3 (pbk); ISBN 978-1-119-24567-4 (ebk); ISBN 978-1-119-24568-1 (ebk)

1. Table of Contents

You may know individuals who make their living as accountants. You may be thankful that theyre the accountants and youre not. You may prefer to leave accounting to the accountants and think that you dont need to know anything about accounting. This attitude reminds me of the old Greyhound Bus advertising slogan: Leave the Driving to Us. Well, if you could get around everywhere you wanted to go on the bus, that would be no problem. But if you have to drive most places, youd better know something about cars. Throughout your life, you do a lot of financial driving, and you should know something about accounting.

Sure, accounting involves numbers. So does watching your car mileage, knowing your blood pressure, keeping track of your bank balance, negotiating the interest rate on your home mortgage, monitoring your retirement fund, and bragging about your kids grade point average. You deal with numbers all the time. Accountants provide financial numbers, and these numbers are very important in your financial life. Knowing nothing about financial numbers puts you at a serious disadvantage. In short, financial literacy requires a working knowledge of accounting, which this book provides.

Here are some advantages this book offers over other accounting texts:

• I explain accounting in plain English, and I keep jargon and technical details to a minimum. (You can also find a glossary of accounting terms in the back of the book.)
• I carefully follow a step-by-step approach in explaining topics.
• I include only topics that nonaccountants should understand; I avoid topics that only practicing accountants have to know.
• I include candid discussions of sensitive accounting topics that go unmentioned in many books.
• Ive set up the book so you can read the chapters in any order you please. You can tailor your reading plan to give priority to the chapters of most interest to you and read other chapters as time permits.

I should mention one thing: This book is not an accounting textbook. Introductory accounting textbooks are ponderous, dry as dust, and overly detailed. However, textbooks have one useful feature: They include exercises and problems. If you have the time, you can gain additional insights and test your understanding of accounting by working the exercises and short problems in my book Accounting Workbook For Dummies (Wiley).

I assume that you have a basic familiarity with the business world, but I take nothing for granted regarding how much accounting you know. I start at the beginning. Even if you have some knowledge of accounting and financial statements, I think youll find this book useful. The book should provide insights you havent thought of before (I gained many new insights about accounting while writing this book, thats for sure).

Ive written this book with a wide audience in mind. You should find yourself more than once in the following list of potential readers:

• Business managers (at all levels): Trying to manage a business without a good grip on financial statements can lead to disaster. How can you manage the financial performance of your business if you dont understand your financial statements in the first place?
• Business buyers and sellers: Anyone thinking of buying or selling a business should know how to read its financial statements and how to true up these accounting reports that serve as a key point of reference for setting a market value on the business.
• Entrepreneurs: As budding business managers, they need a solid grasp of accounting basics.
• Active investors: Investors in marketable securities, real estate, and other ventures need to know how to read financial statements, both to stay informed about their investments and to spot any signs of trouble.
• Passive investors: Many people let the pros manage their money by investing in mutual funds or using investment advisors to handle their money; even so, they need to understand the investment performance reports they get, which use plenty of accounting terms and measures.
• Accountants to be: This book is a good first step for anyone considering a career in professional accounting. If the content turns you off, you may want to look for another vocation.
• Bookkeepers: Strengthening their knowledge of accounting should improve their effectiveness and value to the organization and advance their careers.