Accounting Demystified pptx

[...]... managerial accounting, cost accounting, and tax 1 2 Accounting Demystified accounting, to name a few These other types of accounting are covered in other books The end user of financial accounting is the public; therefore, financial accounting has a lot of rules These rules are necessary to make the information presented in the financial statements consistent and understandable In contrast, in managerial accounting, ... manner Financial accounting is an incremental process What you learn in earlier chapters is used in later ones There are no shortcuts to learning financial accounting, but at the same time, if it is taught clearly, it is not difficult Financial accounting involves all the steps from the original entries in the accounting records to the preparation of financial statements There are other types of accounting. .. page intentionally left blank Accounting Demystified This page intentionally left blank C H A P T E R 1 Introduction The success or failure of a business is measured in dollars And dollars are recorded and reported using accounting Accounting is truly the language of business No matter what your role may be, if you are involved in business, you can benefit from learning accounting That’s what this book... financial accounting, the financial statements, then jump back to the first step in the accounting process, making journal entries This may seem out of order, but it follows the way accounting is best understood and learned rather than following the chronology of how accounting is done You cannot be a good accountant if you are not a good bookkeeper Bookkeeping is considered a lower-level profession than accounting, ... Summary This chapter covered the end result of financial accounting, the preparation of financial statements Now we jump back to the beginning of the accounting process and look at how the information gets recorded in order to be available to be put on the financial statements C H A P T E R 3 The Accounting Process We started with the end product of the accounting process, the financial statements The steps... Cash (which will increase the balance of the Cash account) and a credit to The Accounting Process 15 Sales (which will increase the balance of the Sales account) How do we know when debits will increase or decrease an account? We know the effect debits and credits have from the accounting equation The Accounting Equation The accounting equation is the algebraic formula: Assets ‫ ס‬Liabilities ‫ ם‬Equity... statements Close These steps include some words we haven’t used before They will be explained later in the chapter 13 14 Accounting Demystified Journalize Journalizing is the process of taking transactions and turning them into a form (a journal entry) that can be captured by the financial accounting system Not everything that happens in the course of a business day requires that a journal entry be made If... possess skills that bookkeepers do not However, the first step in learning accounting is to learn bookkeeping What makes it accounting and not simply bookkeeping is going beyond just recording the entries into such areas as preparing the financial statements, analyzing the statements, and making necessary adjusting entries at the end of the accounting period A last thing to keep in mind when reading this book... complete the Balance Sheet, the ending amount of Retained earnings is needed This number comes from the Statement of Retained Earnings, so it makes sense to prepare the Statement of Retained Earnings 12 Accounting Demystified prior to preparing the Balance Sheet In order to complete the Statement of Retained Earnings, the amount of net income is required, and this comes from the Income Statement Therefore,... income in order not to confuse this account with Interest expense When an account comes in two flavors (income and expense), we cannot shorten its name The Income Statement is concerned with how much 6 Accounting Demystified money the company brought in and how much it spent in order to bring that money in The Income Statement covers a period of time This period may be a month, a quarter, six months, a year, . as well, such as managerial accounting, cost accounting, and tax 1 10288$ $CH1 08-29-03 08:30:59 PS 2 Accounting Demystified accounting, to name a few. These other types of accounting are covered. class="bi x0 y0 w0 h0" alt="" Accounting Demystified 10288$ $$FM 08-29-03 08:30:20 PS 10288$ $$FM 08-29-03 08:30:21 PS This page intentionally left blank Accounting Demystified Jeffry R. Haber,. financial accounting, without which this book would not be necessary. ix 10288$ $ACK 08-29-03 08:30:28 PS 10288$ $ACK 08-29-03 08:30:28 PS This page intentionally left blank Accounting Demystified