Mastering Financial Accounting Essentials: The Critical Nuts and Bolts (Wiley Finance)

176 Pages·2009·1.51 MB·English

by  Stuart A. McCrary

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Mastering
Financial Accounting
Essentials
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Mastering
Financial Accounting
Essentials
The Critical Nuts and Bolts
STUART A. M CRARY
C
John Wiley & Sons, Inc.
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Copyright#2010byStuartMcCrary.Allrightsreserved.
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LibraryofCongressCataloging-in-PublicationData:
McCrary,StuartA.
Masteringfinancialaccountingessentials:thecriticalnutsandbolts /
StuartA.McCrary.
p.cm.– (Wileyfinanceseries)
Includesindex.
ISBN978-0-470-39332-1(cloth)
1. Accounting.2. Financialstatements. I. Title.
HF5636.M422010
657–dc22
2009017159
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
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Tomylovingwife,Nancy
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Contents
Preface xi
Acknowledgments xiii
CHAPTER1
CreatingLedgerAccounting 1
CountEverything 4
TheBeginningsofDouble-EntryAccounting 5
Double-EntryRecordingofBusinessTransactions 7
HandlingDebitsandCredits 7
KeepingTrackofData 9
AMathematicalDescriptionofDouble-EntryConventions 10
HandlingIncomeItems 11
DeterminingProfitintheSimpleAccountingModel 11
PermanentAccountsOverview 11
TemporaryAccountsOverview 12
Conclusion 12
Questions 13
CHAPTER2
AccountingConventions 15
ReasonsAccountantsDevelopConventions 15
AccountingCycle 16
Classification 16
Comparability 16
Conservatism 16
Double-Entry 17
FullDisclosure 17
FocusonAddition 18
GenerallyAcceptedAccountingPrinciples(GAAP) 18
Going-ConcernValue 19
JournalEntry 19
Matching 20
vii
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viii CONTENTS
Materiality 20
Recognition 20
Understandability 21
Usefulness 21
Valuation 21
Verifiability 22
Conclusion 22
Questions 23
CHAPTER3
BalanceSheet 25
BalanceSheetContainsPermanentAccounts 25
TimeLineofCashFlows 25
TypesofBalanceSheetAccounts 27
PresentingtheClassifiedBalanceSheet 35
Conclusion 36
Question 37
CHAPTER4
AddinganIncomeStatement 39
TemporaryAccounts 39
UsingTemporaryAccounts 40
TypesofTransactionsInvolvingTemporaryAccounts 42
IncomeAccounts 44
Single-StepIncomeStatement 46
MultistepIncomeStatement 46
Conclusion 47
Questions 49
CHAPTER5
TimingandAccrualAccounting 51
JournalingAccountingTransactions 51
CashBasisAccounting 51
AccrualBasisAccounting 52
Conclusion 62
Questions 63
CHAPTER6
TheStatementofCashFlows 67
ImportanceofCash 67
AnIntuitiveWaytoTrackCash 68