Chapter
Why accounting rules are important
Income tax and accounting rules
Flexibility in accounting standards
Enforcing Accounting Rules
Following established standards
Protecting investors: Sarbanes-Oxley and beyond
The Accounting Department: What Goes On in the Back Office
Focusing on Business Transactions and Other Financial Events
Taking a Closer Look at Financial Statements
The profit and loss account
Chartered accountant (CA)
The financial controller: The chief accountant in an organisation
Accounting branches: Treasury, tax and audit
Chapter 2 Bookkeeping 101: From Shoe Boxes to the Cloud
Bookkeeping versus Accounting
Pedalling through the Bookkeeping Cycle
2. Prepare and collect source documents
3. Record original entries into journals and accounts
4. Perform end-of-period procedures
5. Prepare the adjusted trial balance for the accountants
Managing the Bookkeeping and Accounting System
Categorise your financial information: The chart of accounts
Standardise source document forms and procedures
Don’t be penny-wise and pound-foolish: The need for competent, trained personnel
Protect the family jewels: Internal controls
Keep the scales in balance with double-entry accounting
Check your figures: End-of-period procedures checklist
Keep good records: Happy audit trails to you!
Look out for unusual events and developments
Design truly useful accounting reports for managers
Double-Entry Accounting for Non-Accountants
The two-sided nature of a business entity and its activities
Recording transactions using debits and credits
Accounting Software and Other Ways to Keep the Books in Order
Exploring popular accounting approaches
Using a bookkeeping service
Chapter 3 Taxes, Taxes and More Taxes
Taxing Wages and Property
Putting the government on the payroll: Employer taxes
Taxing everything you can put your hands on: Property taxes
Getting to Grips with VAT
Completing your VAT return
Choosing cash or income accounting
Taxing Your Bottom Line: Company Taxes
Different tax rates on different businesses
The best legal structures
Profit accounting and taxable income accounting
Chapter 4 Accounting and Your Personal Finances
The Accounting Vice You Can’t Escape
The Ins and Outs of Figuring Interest and Return on Investment (ROI)
Individuals as savers: The power of compounding
An Accounting Template for Retirement Planning
Part 2 Getting a Grip on Financial Statements
Chapter 5 Profit Mechanics
Swooping Profit into One Basic Equation
Measuring the Financial Effects of Profit-Making Activities
Understanding assets and liabilities
Preparing the balance sheet equation
Exploring the Profit-Making Process One Step at a Time
Stock (or Inventory) and cost of goods sold expense
So Where’s Your Hard-Earned Profit?
Reporting Profit to Managers and Investors: The Profit and Loss Account
Reporting normal, ongoing profit-making operations
Reporting unusual gains and losses
Putting the profit and loss account in perspective
Chapter 6 The Balance Sheet from the Profit and Loss Account Viewpoint
Coupling the Profit and Loss Account with the Balance Sheet
Sizing Up Assets and Liabilities
Sales revenue and debtors
Cost of goods sold expense and stock
SA&G expenses, and the four balance sheet accounts that connect with these expenses
Fixed assets and depreciation expense
Debt and interest expense
The bottom line: Net profit (net income) and cash dividends (if any)
Financing a Business: Owners’ Equity and Debt
Reporting Financial Condition: The Classified Balance Sheet
Current (short-term) assets
Current (short-term) liabilities
Costs and Other Balance Sheet Values
Chapter 7 Cash Flows and the Cash Flow Statement
The Three Types of Cash Flow
Setting the Stage: Changes in Balance Sheet Accounts
Getting at the Cash Increase from Profit
Computing cash flow from profit
Getting specific about changes in assets and liabilities
Presenting the Cash Flow Statement
Exploring the key features of the cash flow statement
Considering alternative ways to report cash flow from profit
Sailing through the rest of the cash flow statement
Free Cash Flow: What on Earth Does That Mean?
Scrutinising the Cash Flow Statement
Chapter 8 Funding the Business
Weighing Your Financing Options
Going with the government
Benefiting from business angels
Going for venture capital
Looking to corporate venturing
Understanding due diligence
Researching Grants and Awards
Starting off with a SMART award
Raising Money from the Crowd
Grasping the crowdfunding concept
Checking out who is in the game
Comparing Accelerators and Incubators
Incubators and accelerators
Considering a Public Listing
Part 3 Accounting in Managing a Business
Chapter 9 Managing Profit Performance
Redesigning the External Profit and Loss Account
Basic Model for Management Profit and Loss Account
Variable versus fixed operating expenses
From operating profit (EBIT) to the bottom line
Traversing Two Trails to Profit
Calculating the margin of safety
Lower profit from lower sales – but that much lower?
Profit swings due to operating leverage
Cutting sales price can gut profit
Cutting prices to increase sales volume: A very tricky game to play!
Cash flow from improving profit margin versus improving sales volume
Chapter 10 Business Budgeting
The Reasons for Budgeting
The modelling reasons for budgeting
Planning reasons for budgeting
Management control reasons for budgeting
Other benefits of budgeting
Budgeting and Management Accounting
Developing your profit strategy and budgeted profit and loss account
Budgeting cash flow from profit for the coming year
Calculating the internal rate of return
Arriving at the cost of capital
Staying Flexible with Budgets
Chapter 11 Choosing the Right Ownership Structure
From the Top Line to the Bottom Line
Revenue, income and profits
What Owners Expect for Their Money
Partnerships and limited partnerships
Chapter 12 Cost Conundrums
Previewing What’s Coming Down the Road
What Makes Cost So Important?
Sharpening Your Sensitivity to Costs
Direct versus indirect costs
Fixed versus variable costs
Relevant versus irrelevant (sunk) costs
Separating between actual, budgeted and standard costs
Product versus period costs
Putting Together the Pieces of Product Cost for Manufacturers
Minding manufacturing costs
Allocating costs properly: Not easy!
Fixed manufacturing costs and production capacity
Excessive production output for puffing up profit
A View from the Top Regarding Costs
Chapter 13 Choosing Accounting Methods
Decision-Making Behind the Scenes in Profit and Loss Accounts
Calculating Cost of Goods Sold and Cost of Stock
Identifying Stock Losses: Net Realisable Value (NRV)
Managing Your Stock Position
Appreciating Depreciation Methods
Straight-line versus accelerated depreciation
The double-declining balance (DDB) depreciation method
Collecting or Writing Off Bad Debts
Reconciling Corporation Tax
Dealing with Foreign Exchange
Two Final Issues to Consider
Part 4 Financial Reports in the Outside World
Chapter 14 How Investors Read a Financial Report
Financial Reporting by Private versus Public Businesses
Analysing Financial Reports with Ratios
Earnings per share, basic and diluted
Price/earnings (P/E) ratio
Return on equity (ROE) ratio
Return on assets (ROA) ratio
Appreciating the limits of ratios
Two special ratio analysis situations
Making Sure That Disclosure Is Adequate
Types of disclosures in financial reports
Footnotes: Nettlesome but needed
Checking for Ominous Skies on the Audit Report
Using FAME (Financial Analysis Made Easy)
Chapter 15 Professional Auditors and Advisors
Who’s Who in the World of Audits
What an Auditor Does before Giving an Opinion
What’s in an Auditor’s Report
True and fair, a clean opinion
Other kinds of audit opinions
Do Audits Always Catch Fraud?
Looking for errors and fraud
What happens when auditors spot fraud
Chapter 16 Ten Ways Savvy Business Managers Use Accounting
Make Better Profit Decisions
Understand That a Small Sales Volume Change Has a Big Effect on Profit
Fathom Profit and Cash Flow from Profit
Profit accounting methods are like hemlines
Call the Shots on Your Management Accounting Methods
Optimise Capital Structure and Financial Leverage
Develop Better Financial Controls
Explain Your Financial Statements to Others
Chapter 17 Ten (plus One) Questions Investors Should Ask When Reading a Financial Report
Did the Profit Ratios Hold?
Were There Any Unusual or Extraordinary Gains or Losses?
Did Earnings Per Share Keep Up with Profit?
Did the Profit Increase Generate a Cash Flow Increase?
Are Increases in Assets and Liabilities Consistent with the Business’s Growth?
Can the Business Pay Its Liabilities?
Are There Any Unusual Assets and Liabilities?
How Well Are Assets Being Utilised?
What Is the Return on Capital Investment?
Have the Numbers Been Nudged?
Fluffing up the cash balance by ‘window dressing’
Smoothing the rough edges off profit
Chapter 18 Ten Ways to Get a Better Handle on the Financial Future
Sales Forecasts versus Sales Objectives
Dealing with Demand Curves
Appendix Glossary: Slashing through the Accounting Jargon Jungle
Understanding Business Accounting For Dummies - UK
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