Financial Accounting For Dummies

Learn to speak fluent finance--and ace your exams!

Warren Buffett said that "accounting is the language of business." And for many accounting and business students, the obscure terminology of accounting makes fluency hard to achieve. Financial Accounting For Dummies can help to demystify abstract concepts in a straightforward, friendly way. With step-by-step examples and real-world scenarios practice, it helps you grasp the fundamentals of accounting until you're ready to interpret, analyze, and evaluate corporate financial statements like you've been doing it all your life.

Packed with easy-to-understand examples, this book takes you from the big three financial statements all the way through to income taxes. Or join the anti-fraud squad by discovering how to spot the ten most common accounting shenanigans.

• Grasp introductory financial accounting course material

• Explore common concepts financial professionals use to compile reports

• Understand leases, free cash flow, and statement analysis

• Learn accounting for small businesses

Whether you're studying for your bachelor's, MBA, or MAcc, you'll find everything you need to speak the language of finance like a native--and use it to get to wherever you want to go!

Auteur

Maire Loughran, CPA, is a university professor who teaches both undergraduate and graduate accounting classes. She is the author of Auditing For Dummies as well as the previous edition of Financial Accounting For Dummies.

Résumé
Learn to speak fluent financeand ace your exams!

Warren Buffett said that accounting is the language of business.'' And for many accounting and business students, the obscure terminology of accounting makes fluency hard to achieve. Financial Accounting For Dummies can help to demystify abstract concepts in a straightforward, friendly way. With step-by-step examples and real-world scenarios practice, it helps you grasp the fundamentals of accounting until you're ready to interpret, analyze, and evaluate corporate financial statements like you've been doing it all your life.

Packed with easy-to-understand examples, this book takes you from the big three financial statements all the way through to income taxes. Or join the anti-fraud squad by discovering how to spot the ten most common accounting shenanigans.

• Grasp introductory financial accounting course material
• Explore common concepts financial professionals use to compile reports
• Understand leases, free cash flow, and statement analysis
• Learn accounting for small businesses
  Whether you're studying for your bachelor's, MBA, or MAcc, you'll find everything you need to speak the language of finance like a nativeand use it to get to wherever you want to go!

Contenu

Introduction 1

About This Book 2

Foolish Assumptions 2

Icons Used in This Book 3

Beyond the Book 3

Where to Go from Here 4

Part 1: Getting a Financial Accounting Initiation 5

Chapter 1: Seeing the Big Picture of Financial Accounting 7

Knowing the Purposes of Financial Accounting 8

Preparing financial statements 8

Showing historic performance 10

Providing results for the annual report 10

Getting to Know Financial Accounting Users 11

Identifying the most likely users 11

Recognizing their needs 11

Providing information for decision-making 12

Respecting the Key Characteristics of Financial Accounting Information 13

Relevance 13

Reliability 14

Comparability 14

Consistency 15

Accepting Financial Accounting Constraints 17

Considering Your Ethical Responsibilities 18

Following the accountant's code of conduct 18

Having integrity 19

Maintaining objectivity 19

Achieving independence 20

Introducing the Conceptual Framework of Financial Accounting 21

Chapter 2: Introducing the Big Three Financial Statements 23

Gauging the Health of a Business through Its Financials 24

Reporting Assets and Claims: The Balance Sheet 25

Realizing why the balance sheet is classified 26

Studying the balance sheet components 26

Seeing an example of a classified balance sheet 29

Posting Profit or Loss: The Income Statement 30

Keeping a scorecard for business activity 30

Studying the income statement components 31

Seeing an example of an income statement 33

Showing the Money: The Statement of Cash Flows 33

Tracking sources and uses of cash 34

Studying sections of the cash flow statement 34

Seeing a short statement of cash flows 35

Chapter 3: Running the Numbers for Success 37

Identifying Accounting Issues and Solutions 38

Selecting a Business Entity 38

Advantages of the sole proprietorship 39

Owners' capital 39

Limiting liability with the S Corporation 40

Learning about recognition options 41

Reporting for Small Businesses 42

Preparing reports 42

Analyzing reporting 45

Identifying cost issues 46

Managing Cash 48

Identifying cost issues 48

Improving cash flow 53

Chapter 4: Acronym Alert! Setting the Standards for Financial Accounting 55

Walking through the Origins of Number Crunching 56

Knowing the Role of the American Institute of Certified Public Accountants (AICPA) 58

ASB audit and attestation standards 59

AICPA Code of Professional Conduct 60

Following Regulatory Issues 61

The U.S Securities and Exchange Commission (SEC) 62

The Sarbanes-Oxley Act of 2002 (SOX) 63

The Public Company Accounting Oversight Board (PCAOB) 64

Getting to Know the Financial Accounting Standards Board (FASB) 65

Understanding generally accepted accounting principles (GAAP) 66

Looking online for the FASB's standards 67

Part 2: Reviewing Some Accounting Basics 69

Chapter 5: Booking It: The Process Behind Financial Accounting 71

Shedding Some Light on Bookkeeping 72

Analyzing the Effect of Business Transactions 73

Working the fundamental accounting equation 73

Getting familiar with accounts 74

Defining debits and credits 76

Learning about the transaction methodology 77

Defining Journals 78

Using journals to record cash transactions 78

Recording accrual transactions 82

Learning about other journals 84 Seein...