The Practical Guide to Finance and Accounting

by Drake, Susan M.; Dingler, Renee G.

• ISBN13: 9780735201804
• ISBN10: 0735201803
• Format: Paperback
• Copyright: 2001-04-01
• Publisher: Cch Inc

Summary

A fundamental financial reference for nonfinancial people, this is an easy-to-follow guide written in non-technical terms. A good resource for corporate managers with little or no financial experience. The accompanying CD-ROM features Excel spreadsheet examples and a glossary of key terms.

Table of Contents

Preface	xxi
Introduction
ACCOUNTING AND FINANCE: A SYSTEMATIC APPROACH TO MANAGEMENT
A Way of Keeping Score	1	(1)
A Barometer of Outcomes	1	(1)
What Is Accounting?	2	(1)
What Is Finance?	2	(1)
Four Underlying Principles of Accounting and Finance	3	(1)
Who Uses Accounting and Finance Information?	4	(3)
What Is Accounting?
Accounting Records Information	7	(1)
Public and Private Accounting	8	(1)
Career Paths For Accounting Professionals	9	(1)
Specialized Fields in Accounting	10	(3)
Certifications	13	(2)
The Rules Of Accounting
Who Governs Accounting?	15	(1)
How Accounting Rules Originated	16	(1)
Creating Consistency	16	(1)
The Accounting Principles Board (APB)	17	(1)
Weaknesses of the System	17	(1)
The Birth of FASB	18	(6)
Accounting Tools
Tools of Accounting	24	(1)
Accounting Formats	24	(2)
The Basic Accounting Model	26	(1)
Debits and Credits	27	(3)
Double-Entry Bookkeeping	30	(1)
Accounts	30	(3)
Recording Accounting Transactions	33	(2)
T-Accounts	35	(1)
Basic Financial Statements: The Key to Understanding a Company's Position	36	(5)
The Annual Report	41	(1)
Some Key Terms	42	(3)
Assets
Tangible and Intangible Assets	45	(1)
Liquid Assets	45	(1)
Current Assets	46	(1)
Cash and Cash Equivalents	46	(7)
Short-Term Investments	53	(1)
Accounts Receivable	54	(8)
Inventories
Classifications of Inventory	62	(1)
What to Include in Inventory	62	(1)
Capitalizing Costs	63	(1)
Putting Inventory Costs on the P&L	64	(3)
How to Determine Inventory	67	(2)
Accounting for Inventory	69	(1)
Inventory Methods	70	(3)
Lower of Cost or Market (LCM)	73	(2)
Net Realizable Value	75	(2)
Long-Term Assets
Property, Plant, and Equipment (PPE)	77	(1)
Depreciable and Nondepreciable Assets	78	(3)
Gifts and Bartering	81	(1)
Other Related Expenditures	82	(1)
Depreciation	83	(10)
Intangible Assets
Goodwill	93	(1)
Legal Rights or Privileges	94	(3)
Leaseholds	97	(1)
Prepaid Expenses	97	(1)
Organization Costs	98	(1)
Deferred Charges	98	(1)
Special Expenses	99	(1)
Amortization	99	(1)
Assets You Won't Find on the Balance Sheet	99	(4)
Liabilities
Current Liabilities	103	(7)
Long-Term Liabilities	110	(27)
Equity
What Is Capital Stock?	137	(1)
Common Stock	138	(2)
Preferred Stock	140	(2)
Treasury Stock	142	(1)
Paid-In Capital	143	(1)
Retained Earnings	143	(1)
Some Key Terms	144	(4)
Statement Of Income
Revenues	148	(2)
Expenses	150	(1)
Cost of Goods Sold	150	(1)
Cost of Goods Manufactured	151	(5)
Gross Profit	156	(1)
General and Administrative Expenses	156	(2)
Net Income Before Interest and Tax	158	(1)
Other Income and Other Expenses	158	(1)
Income Taxes	158	(1)
Extraordinary Items	159	(1)
Net Income	160	(1)
Earnings Per Share	161	(2)
Other Information About the P&L	163	(1)
Comprehensive Income	164	(1)
Financial Reporting
Management Reporting	165	(1)
Market Reporting	166	(1)
The Securities and Exchange Commission (SEC)	166	(2)
The Annual Report	168	(3)
Investor Relations	171	(1)
Stockholders Meetings	171	(1)
Ongoing Communication	172	(3)
Finance
What Is Finance?	175	(1)
Why Is Finance Important?	175	(2)
How Finance Relates to Accounting	177	(1)
Career Paths for Finance Professionals	177	(2)
Certifications	179	(2)
Finance Tools
Planning Encompasses Many Factors	181	(1)
Forecasting	182	(1)
Budgeting	183	(1)
Long-Range Planning	184	(1)
Financial Models	185	(1)
Statistical Analysis	186	(1)
Cost of Capital	186	(1)
Financial Ratios	186	(1)
Time Value of Money	187	(2)
Financial Statement Ratios
What Is a Ratio?	189	(3)
Categories of Frequently Used Ratios	192	(8)
Considering All Factors	200	(4)
Time Value Of Money
Inflation	204	(2)
Interest Rates	206	(2)
Compounding	208	(1)
Risk	209	(3)
TVM Formulas	212	(15)
Capital And Project Budgeting
A Scientific Approach	227	(1)
Three Essential Considerations	227	(3)
Capital Budgeting Techniques	230	(22)
To Lease or Not to Lease, That Is the Question!	252	(5)
Responsibilities of Nonfinancial Managers
P&L Review	257	(2)
Steps to Easy Budgeting	259	(3)
Forecasting	262	(3)
Managing Costs	265	(6)
Managing Payroll and Related Expenses	271	(1)