Accounting for Non-Accountants: The Fast and Easy Way to Learn the Basics

242 Pages·2006·5.91 MB·English

by  Wayne Label

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A quick, compact and Quick Start
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DR. WAYNE A. LABEL, CPA
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Accounting
Non-
for
Accountants
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Accounting
Non-
for
Accountants
The fast and easy way
to learn the basics
DR. WAYNE A. LABEL, CPA
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Copyright © 2006 by Wayne A.Label
Cover and internal design © 2006 by Sourcebooks,Inc.
©Copyright 2005 Station Casinos,Inc; Design:Kuhlmann Leavitt,Inc.,St.Louis
Sourcebooks and the colophon are registered trademarks of Sourcebooks,Inc.
All rights reserved.No part of this book may be reproduced in any form or by any elec-
tronic or mechanical means including information storage and retrieval systems—
except in the case of brief quotations embodied in critical articles or reviews—without
permission in writing from its publisher,Sourcebooks,Inc.
This publication is designed to provide accurate and authoritative information in regard
to the subject matter covered.It is sold with the understanding that the publisher is not
engaged in rendering legal,accounting,or other professional service.If legal advice or
other expert assistance is required, the services of a competent professional person
should be sought.—From a Declaration of Principles Jointly Adopted by a Committee of the
American Bar Association and a Committee of Publishers and Associations
All brand names and product names used in this book are trademarks,registered trade-
marks, or trade names of their respective holders. Sourcebooks, Inc., is not associated
with any product or vendor in this book.
Published by Sourcebooks,Inc.
P.O.Box 4410,Naperville,Illinois 60567-4410
[phone]
FAX:[phone]
www.sourcebooks.com
Library of Congress Cataloging-in-Publication Data
Label,Wayne A.(Wayne Allan)
Accounting for non-accountants : the fast and easy way to learn the basics / Wayne
Label.
p.cm. ISBN-13: 978-1-4022-1483-7
Includes bibliographical references and index.
ISBN-13:978-1-4022-0657-3
ISBN-10:1-4022-0657-7
1. Accounting.2. Financial statements. I.Title.II.Title:Accounting for nonaccoun-
tants.
HF5636.L33 2006
657—dc22
2006012421
Printed and bound in the United States of America.
DR 10 9 8 7 6 5 4 3 2 1
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Contents
ACKNOWLEDGMENTS .......................................ix
INTRODUCTION .............................................1
CHAPTER 1: Introducing Accounting and Financial Statements ......3
•What Is Accounting?
•Who Uses Accounting Information?
• Financial Statements
• How Different Business Entities Present Accounting Information
CHAPTER 2: Generally Accepted Accounting Principles ...........13
•Who Are the SEC,AICPA,and the FASB?
• Generally Accepted Accounting Principles (GAAP)
CHAPTER 3: The Balance Sheet and Its Components .............25
• Understanding the Balance Sheet
•The Accounting Equation
•The Components of the Balance Sheet
•The Transactions Behind the Balance Sheet
CHAPTER 4: The Income Statement ...........................45
• Understanding the Income Statement
•The Income Statement Illustrated
•Transactions That Effect the Income Statement
CHAPTER 5: Preparing and Using a Statement of Cash Flows .....65
•What Is a Statement of Cash Flows?
• Cash and Cash Equivalents
•The Statement of Cash Flows Illustrated
CHAPTER 6: Double-Entry Accounting .........................75
•The General Journal
•The General Ledger
•Adjusting Journal Entries
• Closing Journal Entries
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CHAPTER 7: The Corporation ...............................101
•The Corporation Defined
•What Is Capital Stock?
• Dividends and Splits
• Incorporating Solana Beach Bicycle Company
•What Is Treasury Stock?
CHAPTER 8: Using Financial Statements for Short-Term Analysis ..125
• Using Short-Term Ratios
• Current and Quick Ratios
•Working Capital
• Composition of Assets
CHAPTER 9: Using Financial Statements for Long-Term Analysis ..137
• Quality of Earnings
• Rate of Return on Investment
• Sales-Based Ratios or Percentages
• Earnings Data
• Long-Term Debt Position
• Dividend Data
• Footnotes
CHAPTER 10: Budgeting for Your Business ....................149
•What Is a Budget?
• Planning and Control
•Advantages of Budgeting
•The Master Budget
• Sales Budget
• Capital Budget
• Budgeted Income Statement
•The Cash Budget
CHAPTER 11: Audits and Auditors ...........................159
•What Is an Audit?
•Types of Auditors
•The Standard Audit Opinion Illustrated
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•The Parts of the Report
• Other Types of Audit Reports
•Why Audits Are Useful to You
APPENDIX A: Internet for Accountants .......................171
APPENDIX B: Financial Statements—Station Casinos, Inc. ........175
INDEX ..................................................221
ABOUT THE AUTHOR ......................................227
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Acknowledgments
I would like to thank Ewurama Ewusi-Mensah and Rachel Jay at
Sourcebooks for their tireless efforts to make this book readable and under-
standable to the non-accountants of the world.
I would also like to thank Drs.Bruce Lubich and Richard Samuelson for
their time and effort in reading the manuscript, adding valuable insights,
and making the book a better read.
Finally, I would like to thank the thousands of students and users of my
previous book on this same topic whose comments and suggestions have
helped to improve this book.