Accounting Demystified

Accounting is truly the language of business. Success or failure is measured in dollars, but in order to make good decisions, you need to understand how finances drive business realities and become fluent in the essential elements of the accounting process. Book jacket.

Jeffry R. Haber is a Certified Public Accountant and financial, strategic, and tax consultant, and an assistant professor at Iona College. He is also the founder and former president of SUDZ Laundromats, Inc. He lives in Brooklyn, New York.

Acknowledgments

ix

Introduction

1

(3)

Financial Statements

4

(9)

Income Statement

5

(2)

Statement of Retained Earnings

7

(1)

Balance Sheet

8

(4)

Summary

12

(1)

The Accounting Process

13

(12)

Journalize

14

(1)

The Accounting Equation

15

(2)

Post

17

(2)

Trial Balance

19

(1)

Finding Errors

20

(4)

Rest of the Process

24

(1)

Summary

24

(1)

Making the Entries

25

(5)

Analogies to Personal Life

26

(1)

Some Examples

27

(2)

Summary

29

(1)

Assets

30

(2)

Cash

32

(9)

Petty Cash

32

(2)

Bank Reconciliation

34

(7)

Accounts Receivable

41

(11)

Control Account/Subsidiary Ledger

42

(3)

Bad Debts

45

(7)

Direct Write-Off Method

45

(1)

Allowance Method

46

(6)

Inventory

52

(14)

Specific Identification

54

(1)

First-In, First-Out

55

(4)

Last-In, First-Out

59

(2)

Weighted Average

61

(2)

Things to Keep in Mind

63

(3)

Prepaid Expenses

66

(2)

Other Receivables

68

(4)

Loan Term

68

(1)

Interest

69

(1)

Entries

70

(2)

Fixed Assets

72

(13)

Land

74

(1)

Land Improvements

74

(1)

Leasehold Improvements

75

(1)

Buildings

75

(1)

Equipment and Machinery

75

(1)

Furniture

75

(1)

Fixtures

76

(1)

Vehicles

76

(1)

Depreciation

76

(5)

Straight-Line Depreciation

76

(2)

Declining-Balance Depreciation

78

(3)

Partial-Year Depreciation

81

(1)

Retirement

81

(1)

Asset Sale

82

(3)

Intangible Assets

85

(4)

Liabilities

89

(3)

Unearned Revenue

90

(1)

Accrued Expenses

91

(1)

Accounts Payable

92

(3)

Other Payables

95

(4)

Interest Payable

95

(1)

Rent Payable

96

(1)

Taxes Payable

96

(1)

Salaries Payable

97

(1)

Payroll Taxes Payable

97

(2)

Stockholders' Equity

99

(8)

Types of Stock

100

(1)

Common Stock

101

(1)

Recording the Issuance

102

(1)

Treasury Stock

103

(1)

Dividends

104

(3)

Merchandising Companies

107

(11)

Perpetual Inventory System

111

(3)

Periodic Inventory System

114

(1)

Discounts for Early Payment

115

(2)

Side-by-Side Comparison of the Periodic and Perpetual Systems

117

(1)

Adjusting and Closing Entries

118

(11)

Payroll Accrual

119

(2)

Reversing Entries

121

(2)

Interest Expense

123

(1)

Unearned Revenue

124

(1)

Prepaid Expenses

125

(1)

Closing Entry

125

(4)

Specialized Journals

129

(7)

Cash Receipts Journal

130

(1)

Cash Disbursements Journal

131

(2)

Purchases Journal

133

(1)

Sales Journal

134

(1)

Payroll Journal

134

(2)

Statement of Cash Flows

136

(7)

Direct Method

138

(1)

Indirect Method

139

(4)

Ratio Analysis

143

(8)

Horizontal and Vertical Analysis

144

(1)

Ratio Analysis

145

(4)

Liquidity Ratios

146

(1)

Efficiency Ratios

146

(1)

Profitability Ratios

147

(2)

Summary

149

(2)

Glossary

151

(16)

Index

167

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Accounting Demystified

Summary

Author Biography

Table of Contents

Supplemental Materials