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Beyond the Book
This book is packed with useful information, but if you’re looking for a compact overview of the most important points, check out the online Cheat Sheet. Go to www.dummies.com and search for “Accounting For Dummies Cheat Sheet” in the Search box. You’ll find FAQs on financial statements, accounting tips for business managers, and definitions of key accounting terms. We also want to note that all of the figures presented in this book have been prepared in Excel and can be obtained free of charge by reaching out to us and requesting a copy of the workbook file at [email protected].
Where to Go from Here
There’s no law against starting on page 1 and reading through to the last page. However, you may first want to scan the book’s Contents at a Glance and see which chapters pique your interest.
Perhaps you’re an investor who’s interested in finding out more about financial statements and the key financial statement ratios for investors. In that case, you might start with Chapters 6, 7, and 8, which explain the three primary financial statements of businesses, and finish with Chapter 11, on reading a financial report. (And don’t overlook Chapter 20.)
Or maybe you’re a small-business owner/manager with a basic understanding of your financial statements, but you need to improve how you use accounting information for making key profit decisions and for planning and controlling your cash flow. You might jump right into Chapters 15 and 17, which explain analyzing profit behavior and budgeting cash flows.
Part 1
Opening the Books on Accounting
IN THIS PART …
Discover how accountants are the financial information gatekeepers in the economy and why accounting is so important for for-profit businesses, nonprofit organizations, and government agencies.
Find out how a business or other entity prepares its financial statements, its tax returns, and the reports to its managers. Know how to make sure these documents conform to established standards.
Get the lowdown on bookkeeping — the record-keeping part of accounting — to ensure that the financial information of a business is timely, complete, accurate, and reliable, especially the numbers reported in financial statements and tax returns.
Understand why safeguarding company assets is an integral part of an accountant’s job and how the digital age, the cloud, and technology are transforming the world of accounting.
Look at the various types of business legal entities, see how accounting differs for each one, and get some helpful hints on when different legal structures are best used.
Chapter 1
Accounting in Today’s New Economy
IN THIS CHAPTER
There was a captive audience present when I (coauthor John) taught Accounting 101 because, then as well as now, all business school students have to take this course. In contrast, very few arts and science students elect the course, which is unfortunate. Accounting 101 teaches about business, including the nature of profit (which most people don’t fully understand) and the fundamentals of capitalism.
The course is a very good training ground for becoming financially literate. Accounting is the language of business, finance, investing, and taxes. To be financially literate, you need to know basic accounting. These days, there’s a big push to improve financial literacy, and a basic accounting course offers a useful framework for understanding and thinking about financial issues. Financial literacy is important to help ensure financial security for you and your family as you go through life and eventually enter into retirement.
In one sense, this book is the accounting course you never took. For business grads, the book presents an opportune review of topics you’ve gotten rusty on. We dare say that even accounting majors can glean many insights from this book. You don’t need a college education to gain from this book, however. Like all the For Dummies books, this book delivers useful information in a plain-talking manner, with a light touch to keep it interesting.
As you go through life, you come face to face with a flood of accounting-generated information — more
