Mastering Financial Accounting Essentials (eBook)

The Critical Nuts and Bolts

Stuart A. McCrary (Autor)

eBook Download: PDF

2009
John Wiley & Sons (Verlag)
978-0-470-54955-1 (ISBN)

Infos

An indispensable hands-on guide to financial accounting

In light of recent accounting scandals, it is critical that all financial practitioners understand and play by the rules of the accounting field. Starting from the assumption that the reader is not familiar with any accounting jargon, Mastering Financial Accounting Essentials presents material in a way that explains the key features of modern accounting step by step and helps you develop an intuitive understanding of accounting. Each chapter presents important accounting concepts, from inventory valuation methods and the timing of erosion of productive assets to how internal managers calculate ratios and trends to evaluate business efficiency.

For those who need to understand the language and law of this discipline in order to communicate effectively with accountants and clients, Mastering Financial Accounting Essentials will be an indispensable guide.

Stuart A. McCrary is a Principal at Chicago Partners, a division of Navigant Consulting, Inc. He is a trader and portfolio manager who specializes in traditional and alternative investments, quantitative valuation, risk management, and financial software. Prior to joining Chicago Partners, McCrary was president of Frontier Asset Management, managing a market-neural hedge fund. He also held positions with Fenchurch Capital Management as a senior option trader and CS First Boston as vice president and market maker of over-the-counter options. Prior to that, McCrary was a vice president with the Securities Groups and a portfolio manager with Comerica Bank. McCrary has published two previous books with Wiley: How to Creat and Manage a Hedge Fund and Hedge Fund Course.

Inhalt

Mastering Financial Accounting Essentials 3
Contents 9
Preface 13
Acknowledgments 15
CHAPTER 1 Creating Ledger Accounting 17
Count Everything 20
The Beginnings of Double-Entry Accounting 21
Double-Entry Recording of Business Transactions 23
Handling Debits and Credits 23
Keeping Track of Data 25
A Mathematical Description of Double-Entry Conventions 26
Handling Income Items 27
Determining Profit in the Simple Accounting Model 27
Permanent Accounts Overview 27
Temporary Accounts Overview 28
Conclusion 28
Questions 29
CHAPTER 2 Accounting Conventions 31
Reasons Accountants Develop Conventions 31
Accounting Cycle 32
Classification 32
Comparability 32
Conservatism 32
Double-Entry 33
Full Disclosure 33
Focus on Addition 34
Generally Accepted Accounting Principles (GAAP) 34
Going-Concern Value 35
Journal Entry 35
Matching 36
Materiality 36
Recognition 36
Understandability 37
Usefulness 37
Valuation 37
Verifiability 38
Conclusion 38
Questions 39
CHAPTER 3 Balance Sheet 41
Balance Sheet Contains Permanent Accounts 41
Time Line of Cash Flows 41
Types of Balance Sheet Accounts 43
Assets 43
Liabilities 48
Equity 50
Presenting the Classified Balance Sheet 51
Conclusion 52
Question 53
CHAPTER 4 Adding an Income Statement 55
Temporary Accounts 55
Using Temporary Accounts 56
Types of Transactions Involving Temporary Accounts 58
Income Accounts 60
Revenues 60
Expenses 61
Single-Step Income Statement 62
Multistep Income Statement 62
Conclusion 63
Questions 65
CHAPTER 5 Timing and Accrual Accounting 67
Journaling Accounting Transactions 67
Cash Basis Accounting 67
Accrual Basis Accounting 68
Speed Up Recognizing Expenses 68
Speed Up Recognizing Income 70
Delay Recognizing Income 70
Delay Recognizing Expenses 71
Prepaid Expenses 72
The Downside to Deferring Expenses 74
Depreciation, Depletion, and Amortization: A Different Kind of Deferred Expense 74
Conclusion 78
Questions 79
CHAPTER 6 The Statement of Cash Flows 83
Importance of Cash 83
An Intuitive Way to Track Cash 84
Standard Accounting Categories on the Statement of Cash Flows 84
Using the Indirect Method to Document Changes in the Cash Position 86
Operating 86
Investing 87
Financing 87
Noncash Transactions 88
Using the Direct Method to Document Changes in the Cash Position 88
Operating 88
Investing 91
Financing 91
Producing a Statement of Cash Flows Using the Indirect Method 92
Producing a Statement of Cash Flows Using the Direct Method 94
Conclusion 96
Questions 97
CHAPTER 7 Ensuring Integrity 99
Internal Controls and Procedures 99
Removing Opportunities for Fraud 100
Createan Audit Trail 100
Independent Auditing 100
Verifying Entries 100
Verifying Accounting Procedures 100
The Role of the User of Financial Statements 101
Accrual Assumptions 101
Accelerating Revenues 101
Accelerating Expenses 102
Deferring Revenues 102
Deferring Expenses 102
Conclusion 102
Questions 103
CHAPTER 8 Financial Statement Analysis 105
Restating Accounting Results 105
Ratio Analysis 105
Liquidity Ratios 106
Profitability Ratios 108
Solvency Ratios 110
Other Ratios or Formulas 111
Trend Analysis 112
Industry Analysis 113
Conclusion 114
Questions 115
Collected Questions 117
Answers 121
About the Author 165
Index 167
EULA 176

Produkt-Details

• Erscheint lt. Verlag: 24.9.2009
• Reihe/Serie: Wiley Finance
• Reihe/Serie: Wiley Finance Editions
• Reihe/Serie: Wiley Finance Editions
• Zusatzinfo: Charts: 7 B&W, 0 Color; Tables: 11 B&W, 0 Color
• Sprache: englisch
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Rechnungswesen / Bilanzen
• Schlagworte: Accounting • Financial Accounting • Finanzbuchhaltung • Institutionelle Finanzplanung • Rechnungswesen
• ISBN-10: 0-470-54955-6 / 0470549556
• ISBN-13: 978-0-470-54955-1 / 9780470549551