Products in Inventory Until They Are Sold
Inventory Control
Accounting Issues
7 INVENTORY AND ACCOUNTS PAYABLE
Acquiring Inventory on the Cuff
Accounting Issues
8 OPERATING EXPENSES AND ACCOUNTS PAYABLE
Recording Expenses Before They Are Paid
Accounting Issues
9 OPERATING EXPENSES AND PREPAID EXPENSES
Paying Certain Operating Costs Before They Are Recorded as Expenses
Accounting Issues: Using Prepaid Expenses to Massage the Numbers
10 DEPRECIATION EXPENSE AND PROPERTY, PLANT, AND EQUIPMENT
Overview of Expense Accounting
Depreciation Expense
Accumulated Depreciation and Book Value of Fixed Assets
Book Values and Current Replacement Costs
Intangible Assets
Accounting Issues
11 ACCRUING LIABILITY FOR UNPAID EXPENSES
Recording Accrued Liability for Operating Expenses
Bringing Interest Expense Up to Snuff
Accounting Issues
12 INCOME TAX EXPENSE AND ITS LIABILITY
Taxation of Business Profit
Accounting Issues
13 NET INCOME AND RETAINED EARNINGS, AND EARNINGS PER SHARE (EPS)
Net Income into Retained Earnings
Earnings per Share (EPS)
Accounting Issues
14 CASH FLOW FROM OPERATING (PROFIT-SEEKING) ACTIVITIES
Profit Versus Cash Flow from Profit
Changes in Assets and Liabilities That Impact Cash Flow from Operating Activities
The Direct Method for Reporting Cash Flow from Operating Activities
Profit Before the Bottom Line
Accounting Issues
15 CASH FLOWS FROM INVESTING AND FINANCING ACTIVITIES
Completing the Statement of Cash Flows
Seeing the Big Picture of Cash Flows
Accounting Issues
5 Part Three USING FINANCIAL STATEMENTS 16 FOOTNOTES AND MANAGEMENT DISCUSSIONS Financial Report Content in Addition to Financial Statements Financial Statements—Brief Review Why Footnotes? Two Types of Footnotes Management Discretion in Writing Footnotes Analysis Issues 17 FINANCIAL STATEMENT RATIOS AND ANALYSIS Financial Reporting Ground Rules Financial Statement Preliminaries Benchmark Financial Ratios Two Cash Flow Ratios to Chew On Final Comments 18 FINANCIAL ENGINEERING What Financial Engineering Is Not What Financial Engineering Is 19 CPAs AND FINANCIAL REPORTS Certified Public Accountant (CPA) From Preparation to Audit of Financial Reports by CPAs Why Audits? Do Auditors Discover Financial Reporting Fraud? 20 BASIC QUESTIONS, BASIC ANSWERS When You Buy Stock Does the Company Get Your Money? Are Financial Reports Reliable? Are Some Financial Statements Misleading and Fraudulent? Should You Take the Time to Compute Financial Statement Ratios? Why Read Financial Statements, Then, If You Won’t Find Information That Has Been Overlooked by Others? The Financial Statements and Footnotes of Large Public Companies Would Take Several Hours to Read Carefully: What’s the Alternative? Is There a Basic Test to Gauge a Company’s Financial Performance? Do Financial Statements Report the Truth, the Whole Truth, and Nothing but the Truth? Does Its Financial Report Explain the Basic Profit-Making Strategy or Profit Model of a Business? Does the Market Price of a Public Company’s Stock Shares Depend Directly and Only on the Information Reported in Its Financial Statements?
