Intermediate Accounting For Dummies E-Book

Maire Loughran

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 497

Veröffentlichungsjahr: 2012

Beschreibung

The easy way to master an intermediate accounting course Intermediate accounting courses are required for students seeking bachelor's degrees in accounting and often for degrees in finance, business administration, and management. Intermediate Accounting For Dummies provides you with a deeper and broader level of accounting theory, serving as an excellent course supplement and study guide to help you master the concepts of this challenging program. With easy-to-understand explanations and realworld examples, Intermediate Accounting For Dummies covers all the topics you'll encounter in an intermediate accounting course: the conceptual framework of Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), financial ratio analysis, equity accounting, investment strategies, financial statement preparation, and more * Tracks to a typical intermediate accounting curriculum * Expert information and real-world examples * Other titles from Loughran: Financial Accounting For Dummies and Auditing For Dummies With the help of Intermediate Accounting For Dummies, you'll discover the fast and easy way to take the confusion out of the complex theories and methods associated with a typical intermediate accounting course.

Leseprobe

Intermediate Accounting For Dummies®

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Table of Contents

Introduction

About This Book

Conventions Used in This Book

What You’re Not to Read

Foolish Assumptions

How This Book Is Organized

Part I: Introducing Financial Accounting and Standards

Part II: Preparing and Using Financial Statements

Part III: Homing in on Current and Noncurrent Assets

Part IV: Analyzing Debt and Equity

Part V: Accounting for Advanced Intermediate Issues

Part VI: The Part of Tens

Icons Used in This Book

Where to Go from Here

Part I: Introducing Financial Accounting and Standards

Chapter 1: Seeing the Big Picture of Financial Accounting

Financial Accounting: Seeing Where It All Began

Preparing financial statements

Developing financial standards

Providing results for the users of the financial statements

Identifying reporting challenges

Getting to Know Key Financial Accounting Players

Identifying standard-setting organizations

Recognizing generally accepted accounting principles

Explaining Codification

Introducing international accounting standards

Considering Ethical Responsibilities

Following the accountant’s code of conduct

Having integrity

Maintaining objectivity

Achieving independence

Taking due care

Chapter 2: Walking Through the Conceptual Framework of Financial Accounting

Who Needs a Conceptual Framework?

Knowing the Objective

Respecting Statement Characteristics

Primary

Secondary

Identifying the Elements of Financial Statements

Balance sheet balancing act

Income statement elements

Statement of cash flows elements

Making Assumptions

Going-concern principle

Economic entity

Monetary unit

Periodicity

Sticking to Your Principles

Historic cost

Revenue recognition

Matching

Full disclosure

Accepting Financial Accounting Constraints

Playing it safe

Understanding cost-benefits

Following industry practices

Chapter 3: Invaluable Valuation

Introducing Valuation

Explaining Fair Value

Techniques for measuring fair value

Figuring out highest and best use

Participating in the marketplace

Modeling Valuation

Marketing multiples

Discounting cash flows

Adjusting replacement cost

Joining Forces: The FASB and the IASB

Chapter 4: Reviewing the Accounting System

The Language of Accounting

The accounting equation

Familiarizing yourself with accounts

Defining debits and credits

Looking at financial statement types

What’s mine is mine: Ownership

Analyzing Accounting Cycle Steps

The transaction methodology

Dear diary: Using accounting journals

Posting to ledgers

Preparing the Trial Balance

Adjusting entries

Closing out the books

Reversing Entries

Working with Worksheets

Part II: Preparing and Using Financial Statements

Chapter 5: Posting Income Statement Profit and Loss

Making a Statement

What the information tells you . . .

And what it doesn’t tell you

Everything in Its Right Place: Formatting the Income Statement

Battling the elements

Recognizing the single-step format

Stepping up to the multiple-step format

Managing the Misfits: Examining Irregular Items

Noting discontinued operations

Extraordinary items

Understanding unusual gains and losses

Factoring in changes in principle

Calculating changes in accounting estimates

Watching Out for Special Income Statement Items

Calculating the allocation for income taxes

Reporting earnings per share

Figuring retained earnings

Studying comprehensive income

Arriving at the Final Product

Chapter 6: Reporting Assets and Claims: Keeping Your Balance (Sheet)

Classifying the Balance Sheet

Counting Your Assets

Current

Noncurrent

Reporting Debt and Other Liabilities

Current

Noncurrent

Reporting Equity

Single owner

Partnership

Corporation

Studying Advanced Balance Sheet Issues

Keeping track of contingencies

Walking through accounting policies

Keeping it legal

Valuing accounts fairly

Balance Sheet Disclosure Issues

Seeing Sections of the Balance Sheet

Chapter 7: Follow the Money! Studying Cash Flow

Understanding the Purpose of the Statement of Cash Flows

Formatting the Cash Flow Sections

Figuring cash operation results

Showing cash investing transactions

Accounting for financing activities

Recognizing Methods for Preparing the Statement of Cash Flows

Using the direct method

Starting indirectly with net income

Using the Statement of Cash Flows

Figuring financial liquidity

Analyzing financial flexibility

Showing free cash flow

A Sample Statement of Cash Flows

Chapter 8: Time Is Money: Looking at the Time Value of Money

Taking an Interest in Interest

Applying Earning Concepts

Simple interest

Compound interest

Calculating Single Sums

Future value of a single sum

Future value of a single sum

Calculating Annuities

Annui-whaties?

Future value of an annuity

Present value of an annuity

More Complex Annuities

What happens to an annuity deferred?

Long-term bond valuation

Part III: Homing in on Current and Noncurrent Assets

Chapter 9: Assessing Cash and Receivables

Keep Your Eye on the Money: Managing Cash

Recognizing different cash accounts

Walking through cash equivalents

Controlling cash

Recording and Valuing Accounts Receivable

The origin of accounts receivable

Discounting customer balances

Estimating uncollectible accounts

Recognizing Notes Receivable

Issuing at face value

Issuing at other than face value

Valuing notes on the balance sheet

Disposing of Receivables

Chapter 10: Inventory Cost Flow Assumptions

Looking into Inventory Management

Controlling inventory

Recognizing different inventoried goods

Walking through inventory costs

Discovering Inventory Carrying Valuation Methods

Specific identification

Weighted average

First in, first out (FIFO)

Last in, first out

Handling Special LIFO Issues

The pros and cons of LIFO

LIFO reserves

LIFO Liquidation

Using Lower of Cost or Market

The difference between cost and market value

Different application methods

Estimating Inventory

Using the gross profit method

Evaluating the gross profit method

Retailing inventory

Getting up to speed with the retail inventory method

Watching for falling — and rising — prices!

Using perpetual and periodic inventory methods

Disposing of obsolete inventory

Chapter 11: Buying and Selling Property, Plant, and Equipment (PP and E)

Defining Types of Property, Plant, and Equipment

Land

Buildings

Equipment

Self-constructed assets

Valuing PP and E

Deferring a payment

Issuing stock

Buying in bulk: Lumping purchases

Exchanging assets

Assigning Costs to PP and E

Capitalizing costs

Recording repairs and maintenance expenses

Improving and replacing PP and E

Reinstalling equipment

Selling and Other Dispositions of Plant Assets

Recording sales

Dealing with involuntary conversions

Chapter 12: Recognizing Depreciation, Impairments, and Depletion

Understanding How Depreciation Affects All Financial Statements

Distinguishing Costs and Expenses: What’s the Difference?

Choosing Among Depreciation Methods

Walking the straight-line method

Accelerating by using the declining- balance method

Using the units-of-production method

Calculating sum-of-the-years’ digits

Understanding special depreciation issues

Impairing Assets

Recognizing impairments

Walking through the recovery test

Measuring impairments

Restoring impairment loss

Explaining Depletion

Understanding which assets can be depleted

Figuring your base for depletion

Using salvage value and recoverable units

Chapter 13: Keeping Track of Other Noncurrent Assets

Can’t Touch This: Investigating Intangible Assets

Identifying types of intangibles

Accounting for goodwill

Valuing Intangibles

Writing off intangibles with amortization

Impairing intangible assets

Handling the Costs of Research and Development (R and D)

Identifying R and D

Valuing R and D

Part IV: Analyzing Debt and Equity

Chapter 14: Tracking Current Liabilities and Contingencies

Getting Up to Speed with Current Liabilities

Understanding accounts payable (A/P)

Getting down to business with notes payable (N/P)

Accounting for the current portion of long-term debt

Paying dividends

Returning advances and deposits

Earning revenue

Paying sales and income tax

Taking care of employees

Planning for Future Events

Understanding Contingencies

Gain contingencies

Loss contingencies

Chapter 15: Planning for Long-Term Obligations

Managing Long-Term Debt

The many faces of notes payable

Treasury bonds defined

The dark side of debt-free

Accounting for Bonds, James Bonds

Valuing bonds payable

Issuing at par value

Accounting for discounted bonds

Recording bonds issued at a premium

Chapter 16: Letting Owners Know Where They Stand: The Equity Section

Recording Stockholder Interest

Distinguishing Between Different Types of Ownership

Common stock

Preferred stock

Paid-in capital

Retained earnings

Spotting Reductions to Stockholders’ Equity

Paying dividends

Buying treasury stock

Computing Earnings per Share

Simple capital structure

Complex capital structure

Part V: Accounting for Advanced Intermediate Issues

Chapter 17: Accounting for Income Taxes

Reviewing Income Tax Reporting

Identifying financial income versus taxable income

Understanding temporary differences

Reviewing permanent differences

Explaining tax deferrals

Taking Advantage of Net Operating Losses

Identifying loss carrybacks

Understanding loss carryforwards

Checking Out Interperiod Tax Allocation

The asset-liability method

Looking at interperiod tax allocation using the asset-liability method

Warming Up for Financial Statement Preparation

Reporting on the income statement

Showing the effect on the balance sheet

The Big Reveal: Income Tax Disclosure

Chapter 18: Accounting for Leases

Reviewing Lease Basics

Identifying leasing advantages

Understanding the nature of leases

Accounting for the Lessee

Reviewing operating leases

Walking through capital leases

Understanding financial statement presentation

Accounting for the Lessor

Identifying classification of leases

Understanding operating leases

Talking about direct-financing leases

Reviewing sales-type leases

Understanding financial statement presentation

Working Through Advanced Leasing Topics

Figuring out residual value

Accounting for sales-type leases

Chapter 19: Fessing Up: Correcting Errors and Reporting Changes in Methods

Change Is Good (Even for Accounting Methods)

Reporting Changes in Accounting Principles

Reporting changes currently

Understanding retrospective-effect accounting changes

Using prospective effect for accounting changes

Changes in Estimates

Reviewing estimates

Handling changes prospectively

Understanding Changes in Reporting Entities

Mea Culpa: Analyzing Errors

Reviewing types of errors

Righting the wrong

Take two: Statement restatement

Walking through correction of errors

Chapter 20: Is That You, Revenue? Revenue Recognition Concepts

Reviewing Guidelines for Recognition

Point-of-Sale/Delivery Revenue

Reporting sales discounts

Returning sales

Understanding buyback agreements

Loading and channel stuffing

Contracting Methods

Percentage-of-completion method

Completed-contract method

Delaying Revenue Recognition

Handling the installment method

Recording the cost-recovery method

Reviewing Franchise Sales Transactions

The Full Monty: Revenue Disclosure

Part VI: The Part of Tens

Chapter 21: Ten Common Notes to the Financial Statements

Showing the Basis for Presentation

Advising on Significant Accounting Policies

Depreciating Assets

Valuing Inventory

Disclosing Subsequent Events

Explaining Intangibles

Consolidating Financial Statements

Spelling out Employee Benefits

Revealing Contingencies

Reporting Debt

Chapter 22: Ten Ratios for Financial Statement Analysis

Current Ratio

The Electric Ratio Acid Test

Asset Turnover

Inventory Turnover

Accounts Receivable Turnover

Return on Assets (ROA)

Return on Equity (ROE)

Profit Margin on Sales

Debt to Equity

Book Value Per Share

Cheat Sheet

Intermediate Accounting For Dummies®

by Maire Loughran

Intermediate Accounting For Dummies®

Published by John Wiley & Sons, Inc. 111 River St. Hoboken, NJ 07030-5774 www.wiley.com

Copyright © 2012 by John Wiley & Sons, Inc., Indianapolis, Indiana

Published by John Wiley & Sons, Inc., Indianapolis, Indiana

Published simultaneously in Canada

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About the Author

Maire Loughran is a certified public accountant and a member of the American Institute of Certified Public Accountants. Her professional experience includes four years of internal auditing for a publicly traded company in the aerospace industry, two years as an auditor in the not-for-profit sector, and even some experience as a U.S. federal agent. Her public accounting experience includes financial reporting and analysis, audits of private corporations, accounting for e-commerce, and forensic accounting.

Maire is a full adjunct professor who teaches graduate and undergraduate auditing and accounting classes. Interested in many different business-related fields, she is the author of Auditing For Dummies; Financial Accounting For Dummies (Wiley); Close, Consolidate & Report For Dummies, an IBM Limited Edition; a guide to starting a home-based business; as well as the Arts and Crafts Business Guide for About.com.

Dedication

To my much-loved son Joey, who serves his country aboard the USS Harry S. Truman: I am prouder of you than mere words can ever describe. And to my late husband Jeff, so long gone from our lives, but never absent from our hearts.

Author’s Acknowledgments

To the Ursuline nuns and Jesuit priests who provided me with a stellar education, and to my parents, who selflessly footed the bill.

To my agent, Barb Doyen, for all her hard work and support.

And to Tracy Brown, Krista Hansing, Ron De Witt, and Robert Garrett for their months of editing, follow-through, and advice.

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Introduction

Intermediate accounting takes financial accounting, which is the language of business directed to the external user of the financial statements, to the next level. It fleshes out all the topics that your financial accounting class briefly touches upon and serves as a bridge between basic financial accounting and advanced financial accounting, which really gets into the nitty-gritty of handling financial transactions.

Along the way, you still encounter your old friends, the income statement, balance sheet, and statement of cash flows. And while preparation of the financial statements stays the same no matter what type of financial accounting class you take, intermediate accounting assumes you have a basic understanding of financial accounting and introduces you to more advanced accounting scenarios. For example, you get into inventory issues beyond cost flow assumption and find out about more advanced leasing topics such as residual value.

Although all business students have to take some form of financial accounting class, usually only students interested in pursuing a career in this field move on to intermediate accounting. Plus, intermediate accounting is a prerequisite for advanced financial accounting in many schools, which is a must-take class to prepare for the certified public accountant (CPA) exam.