Introduction 1
About This Book 2
Foolish Assumptions 2
Icons Used in This Book 2
Beyond the Book 3
Where to Go From Here 4
Book 1: Keeping the Books 5
Chapter 1: Basic Bookkeeping 7
Bookkeepers: The Record Keepers of the Business World 8
Delving into Bookkeeping Basics 8
Recognizing the Importance of an Accurate Paper Trail 10
Using Bookkeeping's Tools to Manage Daily Finances 12
Running Tests for Accuracy 14
Finally Showing Off Your Financial Success 14
Wading through Bookkeeping Lingo 16
Pedaling through the Accounting Cycle 18
Tackling the Big Decision: Cash-Basis or Accrual Accounting 20
Seeing Double with Double-Entry Bookkeeping 22
Differentiating Debits and Credits 24
Chapter 2: Charting the Accounts 25
Getting to Know the Chart of Accounts 25
Starting with the Balance-Sheet Accounts 27
Tracking the Income-Statement Accounts 33
Setting Up Your Chart of Accounts 37
Chapter 3: The General Ledger 39
Understanding the Eyes and Ears of a Business 39
Developing Entries for the Ledger 40
Posting Entries to the Ledger 44
Adjusting for Ledger Errors 48
Using Computerized Transactions 48
Chapter 4: Keeping Journals 51
Establishing a Transaction's Point of Entry 51
When Cash Changes Hands 52
Managing Sales Like a Pro 56
Keeping Track of Purchases 58
Dealing with Transactions That Don't Fit 59
Posting Journal Information to Accounts 62
Simplifying Your Journaling with Computerized Accounting 63
Chapter 5: Controlling Your Records 67
Putting Controls on Your Business's Cash 68
Keeping the Right Paperwork 76
Protecting Your Business Against Internal Fraud 79
Insuring Your Cash through Employee Bonding 84
Chapter 6: Computer Options for Bookkeeping 85
Surveying Your Software Options 86
Setting Up Your Computerized Books 89
Chapter 7: Financial Statements and Accounting Standards 95
Reviewing the Basic Content of Financial Statements 96
Contrasting Profit and Cash Flow from Profit 107
Gleaning Key Information from Financial Statements 108
Keeping in Step with Accounting and Financial Reporting Standards 112
Book 2: Accounting and Financial Reports 119
Chapter 1: Financial Report Basics 121
Figuring Out Financial Reporting 122
Checking Out Types of Reporting 125
Introducing the Annual Report 129
Digging Deeper into the Annual Report 132
Summarizing the Financial Data 143
Chapter 2: Reporting Profit 145
Introducing Income Statements 146
Finding Profit 151
Getting Particular about Assets and Operating Liabilities 154
Summing Up the Diverse Financial Effects of Making Profit 159
Reporting Extraordinary Gains and Losses 160
Correcting Common Misconceptions about Profit 163
Importance of Reviewing All Parts of Financial Statements 164
Chapter 3: Exploring Business Structures 167
Flying Solo: Sole Proprietorships 168
Joining Forces: Partnerships 170
Seeking Protection with Limited Liability Companies 171
Shielding Your Assets: S and C Corporations 172
Investigating Private Companies 175
Understanding Public Companies 179
Entering a Whole New World: How a Company Goes from Private to Public 185
Chapter 4: The Balance Sheet: Assets, Liabilities, and Equity 187
Understanding the Balance Equation 188
Introducing the Balance Sheet 188
Ogling Assets 192
Looking at Liabilities 199
Navigating the Equity Maze 201
Chapter 5: The Income Statement 203
Introducing the Income Statement 204
Delving into the Tricky Business of Revenue 208
Acknowledging Expenses 212
Sorting Out the Profit and Loss Types 214
Calculating Earnings per Share 217
Chapter 6: The Statement of Cash Flows 219
Digging into the Statement of Cash Flows 220
Checking Out Operating Activities 223
Investigating Investing Activities 226
Understanding Financing Activities 227
Recognizing the Special Line Items 229
Adding It All Up 230
Chapter 7: Getting a Financial Report Ready 233
Recognizing Top Management's Role 234
Reviewing the Purposes of Financial Reporting 236
Keeping Current with Accounting and Financial Reporting Standards 237
Making Sure That Disclosure is Adequate 238
Putting a Spin on the Numbers (Short of Cooking the Books) 244
Going Public or Keeping Things Private 250
Dealing with Information Overload 252
Statement of Changes in Owners' Equity 254
Chapter 8: Accounting Alternatives 257
Setting the Stage 258
Taking Financial Statements with a Grain of Salt 259
Explaining the Differences 262
Calculating Cost of Goods Sold Expense and Inventory Cost 268
Recording Depreciation Expense 272
Scanning Revenue and Expense Horizons 275
Book 3: Day-to-Day Bookkeeping 277
Chapter 1: Buying and Tracking Your Purchases 279
Keeping Track of Inventory 280
Practice: Working with Inventory and Calculating Cost of Goods Sold 289
Buying and Monitoring Supplies 292
Staying on Top of Your Bills 292
Practice: Calculating Discounts 294
Answers to Practice Questions 295
Chapter 2: Counting Your Sales 297
Collecting on Cash Sales 297
Practice: Recording Sales 301
Selling on Credit 303
Practice: Sales on Store (Direct) Credit 308
Proving Out the Cash Register 310
Practice: Proving Out 311
Tracking Sales Discounts 313
Practice: Recording Discounts 315
Recording Sales Returns and Allowances 317
Practice: Tracking Sales Returns and Allowances 318
Monitoring Accounts Receivable 319
Practice: Aging Summary 320
Accepting Your Losses 321
Answers to Practice Questions 322
Chapter 3: Employee Payroll and Benefits 325
Setting the Stage for Staffing: Making Payroll Decisions 326
Collecting Employee Taxes 330
Determining Net Pay 332
Practice: Payroll Tax Calculations 333
Surveying Your Benefits Options 334
Preparing Payroll and Posting It in the Books 336
Practice: Payroll Preparation 339
Finishing the Job 340
Depositing Employee Taxes 342
Outsourcing Payroll and Benefits Work 342
Answers to Practice Questions 343
Chapter 4: Employer-Paid Taxes and Government Payroll Reporting 345
Paying Employer Taxes on Social Security and Medicare 346
Completing Unemployment Reports and Paying Unemployment Taxes 348
Practice: Calculating FUTA Tax 352
Carrying Workers' Compensation Insurance 352
Maintaining Employee Records 354
Answers to Practice Questions 357
Book 4: Preparing for Year's End 359
Chapter 1: Depreciating Your Assets 361
Defining Depreciation 362
Reducing the Value of Assets 364
Tackling Taxes and Depreciation 368
Setting Up Depreciation Schedules 369
Recording Depreciation Expenses 370
Chapter 2: Paying and Collecting Interest 371
Deciphering Types of Interest 371
Handling Interest Income 373
Delving into Loans and Interest Expenses 374
Chapter 3: Proving Out the Cash 383
Why Prove Out the Books? 383
Making Sure Ending Cash is Right 384
Closing the Cash Journals 385
Using a Temporary Posting Journal 392
Reconciling Bank Accounts 392
Posting Adjustments and Corrections 396
Chapter 4: Closing the Journals 397
Prepping to Close: Checking for Accuracy and Tallying Things Up 398
Posting to the General Ledger 403
Checking Out Computerized Journal Records 404
Chapter 5: Checking Your Accuracy 409
Working with a Trial Balance 409
Testing Your Balance with Computerized Accounting Systems 413
Developing a Financial Statement Worksheet 415
Replacing Worksheets with Computerized Reports 417
Chapter 6: Adjusting the Books 419
Adjusting All the Right Areas 419
Testing an Adjusted Trial Balance 427
Changing Your Chart of Accounts 428
Book 5: Accounting and Managing Your Business 431
Chapter 1: Managing Profit 433
Helping Managers: The Fourth Vital Task of Accounting 434
Internal Profit Reporting 436
Presenting a Profit Analysis Template 439
Answering Critical Profit Questions 443
Taking a Closer Look at the Lines in the Profit Template 446
Using the Profit Template for Decision-Making Analysis 450
Tucking Away Some Valuable Lessons 451
Closing with a Boozy Example 454
Chapter 2: Budgeting 455
Exploring the Reasons for Budgeting 456
Recognizing Additional Benefits of Budgeting 461
Deciding Whether Budgeting is Worth Its Costs 462
Watching Budgeting in Action 467
Considering Capital Expenditures and Other Cash Needs 472
Using Computer Accounting to Make Budgeting More Effective 474
Chapter 3: Cost Accounting 477
Looking Down the Road to the Destination of Costs 478
Are Costs Really That Important? 480
Becoming More Familiar with Costs 483
Assembling the Product Cost of Manufacturers 487
Puffing Profit by Excessive Production 495
Chapter 4: Filing and Paying Business Taxes 501
Finding the Right Business Type 501
Tackling Tax Reporting for Sole Proprietors 504
Filing Tax Forms for Partnerships 505
Paying Corporate Taxes 506
Taking Care of Sales Tax Obligations 507
Chapter 5: Prepping the Books for a New Accounting Cycle 509
Finalizing the General Ledger 510
Conducting Special Year-End Bookkeeping Tasks 511
Starting the Cycle Anew 514
Index 517