Accounting

by Eisen, Peter J.

• ISBN13: 9780764135477
• ISBN10: 0764135473
• Edition: 5th
• Format: Paperback
• Copyright: 2007-04-01
• Publisher: Barrons Educational Series Inc

Summary

Barron's Business Review Books are typically used as college textbook supplements or as main texts in adult education and business brush-up courses. They also make excellent teach-yourself texts for readers who want to expand their business knowledge. This expanded and updated title explains accounting as the main tool for organizing, maintaining, recording, and analyzing the financial activities of every business. Topics explained include the accounting equation, the different financial statements and their differing functions, the process of recording business transactions, special journals and controls, assets and liabilities, inventories, payroll and much more. The text is filled with examples and with review questions and answers.

Table of Contents

Preface	p. ix
The Accounting Equation	p. 1
The Art of Accounting	p. 1
What Is Accounting?	p. 1
Who Uses Accounting Information?	p. 1
What Information Does an Accountant Gather?	p. 2
What Are Assets?	p. 2
Keeping Track of Assets	p. 2
Types of Assets	p. 3
A Common Way to Express Assets	p. 4
Determining the Money Value of Assets	p. 4
How Is the Proprietor's Ownership Expressed?	p. 5
Proprietor's Contributions	p. 5
Assets = Capital	p. 5
How Are Borrowed Assets Expressed?	p. 6
Expressing Borrowed Assets	p. 6
The Accounting Equation	p. 7
What Are Revenue, Expenses, and Profit?	p. 8
Recording Revenue	p. 8
Recording Expenses	p. 9
How Revenue and Expenses Affect Capital	p. 9
Know the Concepts	p. 11
Practical Application	p. 13
Answers	p. 19
Financial Statements	p. 24
What Are Financial Statements?	p. 24
The Income Statement	p. 25
The Statement of Capital	p. 27
The Balance Sheet	p. 28
The Report and Account Forms	p. 29
The Classified Balance Sheet	p. 30
Know the Concepts	p. 33
Practical Application	p. 34
Answers	p. 37
Recording Business Transactions	p. 46
What Are Business Transactions?	p. 46
Information to Keep Track Of	p. 47
Changes Resulting from a Business Transaction	p. 47
Where to Record Business Transactions	p. 47
The Account	p. 48
The Standard Form of the Ledger Account	p. 48
Making Entries in Ledger Accounts	p. 48
Recording Asset Changes	p. 50
Recording Changes in Liability and Permanent Capital Accounts	p. 51
Analyzing Business Transactions	p. 52
Recording Transactions in Temporary Capital Accounts	p. 53
The Rule of Double-Entry Accounting	p. 54
Standard Form for the Ledger Account	p. 55
Other Forms of the Ledger Account	p. 56
Proving the Accuracy of Recorded Transactions	p. 57
The Journal	p. 58
The Purpose and Form of the Journal	p. 59
Recording Business Transactions in the Journal	p. 60
Recording Transactions in Both Journal and Ledger	p. 61
Transferring Transactions from the Journal to the Ledger	p. 63
Verifying Ledger Balances	p. 65
Know the Concepts	p. 67
Practical Application	p. 68
Answers	p. 75
Recording Adjusting, Closing, and Reversing Entries	p. 87
Adjusting Entries	p. 87
Types of Adjusting Entries	p. 88
Accruals	p. 88
Accrued Expenses	p. 89
Accrued Revenue	p. 90
Deferrals	p. 92
Deferred Expenses	p. 92
Deferred Revenue	p. 94
Adjusting Noncurrent Assets	p. 96
What Is Depreciation?	p. 96
Preparing the Worksheet	p. 98
How to Record Adjustments on the Worksheet	p. 100
Using the Completed Worksheet	p. 101
Closing Entries	p. 103
Eliminating the Temporary Account Balances	p. 103
Using the Income Summary Account	p. 103
Post-Closing Trial Balance	p. 106
Verifying the Ledger After Closing	p. 106
Steps in the Accounting Cycle	p. 106
Reversing Entries	p. 107
The Need for Reversing Entries	p. 108
When to Use Reversing Entries	p. 110
Know the Concepts	p. 112
Practical Application	p. 113
Answers	p. 119
A Trading Business	p. 130
How Service and Trading Businesses Differ	p. 130
Special Accounts for a Trading Business	p. 131
Methods of Determining Income	p. 132
Determining Net Sales	p. 132
Recording Sales, and Sales Returns and Allowances	p. 133
Recording Sales Discounts	p. 134
Determining the Cost of Goods Available for Sale	p. 136
Determining Net Purchases	p. 136
Determining the Merchandise Inventory	p. 137
Determining the Cost of Merchandise Sold	p. 139
Recording Daily Business Transactions	p. 140
Adjusting and Closing Entries	p. 142
Converting Beginning Inventory to an Expense	p. 142
Establishing Ending Inventory	p. 142
Preparing a Worksheet	p. 144
Reversing Entries	p. 145
Know The Concepts	p. 146
Practical Application	p. 147
Answers	p. 152
Special Journals and Controls	p. 161
What Are Special Journals?	p. 161
Kinds of Special Journals	p. 162
Sales Journal	p. 163
Cash Receipts Journal	p. 169
Purchases Journal	p. 172
Cash Payments Journal	p. 174
Bracket Entries	p. 177
Other Special Journals	p. 178
Know the Concepts	p. 181
Practical Application	p. 182
Answers	p. 193
Safeguarding Cash-Special Controls	p. 211
Internal Control	p. 211
Special Controls to Safeguard Cash	p. 212
Bank Reconciliation Statement	p. 214
Recording Adjusting Entries	p. 219
Petty Cash Fund	p. 220
Voucher System	p. 223
Know the Concepts	p. 229
Practical Application	p. 230
Answers	p. 236
Receivables and Payables	p. 244
Selling Goods and Services	p. 244
Recognizing Bad Debts	p. 245
Direct Write-off Method	p. 246
Net Sales Method	p. 247
Aging of Accounts Receivable Method	p. 249
Extending Credit	p. 251
Promissory Notes	p. 251
Interest-Bearing Promissory Notes	p. 253
Transferring Notes	p. 258
Know the Concepts	p. 264
Practical Application	p. 265
Answers	p. 271
Long-Life and Intangible Assets	p. 279
Long-Life Assets	p. 279
Using Long-Life Assets	p. 279
Determining Plant and Equipment Costs	p. 280
Allocating Plant and Equipment Costs	p. 281
Depreciation	p. 282
Recording Depreciation for Federal Income Tax Purposes	p. 292
Disposal of Plant Assets	p. 293
Depletion	p. 296
Intangible Assets	p. 298
Amortization	p. 298
Capital Improvements	p. 300
Know the Concepts	p. 301
Practical Application	p. 302
Answers	p. 307
Inventories	p. 313
What Is Merchandise Inventory?	p. 313
Inventories and the Trading Business	p. 314
Errors in Valuing Merchandise Inventories	p. 314
Types of Inventory Systems	p. 317
Determining the Cost of Inventories	p. 321
The FIFO Method	p. 321
The LIFO Method	p. 322
The Weighted Average Method	p. 323
Recognizing Significant Changes in Inventory Value	p. 324
Estimating Inventory Value	p. 326
The Gross Profit Method	p. 326
The Retail Method	p. 327
Know the Concepts	p. 329
Practical Application	p. 330
Answers	p. 334
Payroll	p. 340
What Is Payroll?	p. 340
Payroll Deductions	p. 341
Social Security Tax	p. 342
Federal Income Tax	p. 344
State and Local Taxes	p. 357
Disability Insurance Taxes	p. 358
The Payroll Register	p. 359
The Employee Earnings Record	p. 360
Payroll and Government Regulations	p. 363
Unemployment Compensation Taxes	p. 364
Calculating Employee Earnings	p. 365
The W-2 Form	p. 367
Know the Concepts	p. 368
Practical Application	p. 369
Answers	p. 372
Financial Statements for Partnership and Corporate Forms of Business Organizations	p. 377
Forms of Business Organizations	p. 378
The Partnership	p. 378
Characteristics of the Partnership	p. 378
Advantages and Disadvantages of the Partnership	p. 380
The Partnership Capital and Drawing Accounts	p. 381
Financial Statements of a Partnership	p. 383
The Corporation	p. 385
Characteristics of the Corporation	p. 385
Advantages and Disadvantages of the Corporation	p. 386
Corporate Capital	p. 387
Types of Stock	p. 388
Recording Stock Transactions	p. 392
Financial Statements for a Corporation	p. 397
Know the Concepts	p. 399
Practical Application	p. 400
Answers	p. 405
	p. 411
Statement of Cash Flows	p. 411
	p. 414
Accounting and the Microcomputer	p. 414
Electronic Spreadsheet	p. 415
Data Base	p. 416
Word Processor	p. 417
Graphics	p. 417
Networking and the Internet (World Wide Web)	p. 418
Glossary	p. 420
Index	p. 434
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