Accounting for Managers - William H. Webster.pdf (corporate audit)

Accounting for Managers Other titles in the Briefcase Books series include: Customer Relationship Management by Kristin Anderson and Carol Kerr Communicating Effectively by Lani Arredondo Manager’s Guide to Performance Reviews by Robert Bacal Performance Management by Robert Bacal Recognizing and Rewarding Employees by R. Brayton Bowen Building a High Morale Workplace by Anne Bruce Motivating Employees by Anne Bruce and James S. Pepitone Six Sigma for Managers by Greg Brue Design for Six Sigma by Greg Brue and Robert G. Launsby Leadership Skills for Managers by Marlene Caroselli Negotiating Skills for Managers by Steven P. Cohen Effective Coaching by Marshall J. Cook Conflict Resolution by Daniel Dana Manager’s Guide to Strategy by Roger A. Formisano Project Management by Gary R. Heerkens Managing Teams by Lawrence Holpp Budgeting for Managers by Sid Kemp and Eric Dunbar Hiring Great People by Kevin C. Klinvex, Matthew S. O’Connell, and Christopher P. Klinvex Time Management by Marc Mancini Retaining Top Employees by J. Leslie McKeown Empowering Employees by Kenneth L. Murrell and Mimi Meredith Finance for Non-Financial Managers by Gene Siciliano Skills for New Managers by Morey Stettner Manager’s Survival Guide by Morey Stettner The Manager’s Guide to Effective Meetings by Barbara J. Streibel Interviewing Techniques for Managers by Carolyn P. Thompson Managing Multiple Projects by Michael Tobis and Irene P. Tobis To learn more about titles in the Briefcase Books series go to www.briefcasebooks.com You’ll find the tables of contents, downloadable sample chapters, information on the authors, discussion guides for using these books in training programs, and more. A e fcas Brieo B ok Accounting for Managers William H. Webster, CPA McGraw-Hill New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-143647-2 The material in this eBook also appears in the print version of this title: 0-07-142174-2 All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill.com or (212) 904-4069. TERMS OF USE This is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGrawHill’s prior consent. You may use the work for your own noncommercial and personal use; any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms. THE WORK IS PROVIDED “AS IS”. McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting therefrom. McGrawHill has no responsibility for the content of any information accessed through the work. Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise. DOI: 10.1036/0071436472 For more information about this title, click here. Contents Preface ix 1. How to Speak Accounting 1 The Three Questions Visualize to Understand The Accounting System Accounting from the Bottom Up Double Entry Bookkeeping and Accounting Financial Statements Accounting Principles The Fundamental Equations of Accounting The Advantages of an Accounting System A Few Important Details Manager’s Checklist for Chapter 1 2. Concepts and Principles, Checks and Balances 1 2 5 6 7 12 15 16 18 20 20 24 26 Closing the GAAP Zen Accounting Checks and Balances Audits Manager’s Checklist for Chapter 2 3. Financial Statements 28 36 37 40 44 45 The Lemonade Stand Load, Wash, Rinse, Spin, Dry Past as Prologue The Income Statement Statement of Cash Flows The Balance Sheet 45 47 49 50 53 57 v Copyright 2003 by The McGraw-Hill Companies, Inc. Click Here for Terms of Use. vi Contents A Delicate Balance: The Adjusting Entries Manager’s Checklist for Chapter 3 4. Financial Ratios What Measures Performance? Liquidity Ratios Activity Ratios Debt Ratios Profitability Ratios Putting It All Together Manager’s Checklist for Chapter 4 5. Management Accounting Management Accounting—for the Future Cost/Volume/Profit Analysis Manager’s Checklist for Chapter 5 6. Management Cost Accounting Cost Behavior, Inventory, and Overhead General Widget Company Manager’s Checklist for Chapter 6 7. Cost Accounting in Action 59 63 64 64 69 70 74 75 78 82 83 84 89 101 102 102 112 122 123 Why the Fuss? Job-Order and Process Costing Systems As Complex as ABC Standard Costing Static and Flexible Budgeting Manager’s Checklist for Chapter 7 123 125 132 139 143 144 8. Other Management Accounting Systems 146 They Want It, but They Don’t Want It—Yet They Still Need It Balanced Scorecard Hybrid Costing Just-in-Time Inventory Operation Costing Systems Environmental/Full Cost Accounting Target Costing Transfer Pricing Manager’s Checklist for Chapter 8 146 150 156 156 159 160 164 166 168 Contents 9. Taxation The Principal Taxes Corporate Income and Deduction Tax Issues Alternative Minimum Tax (AMT) Tax Credits Tax Practice Manager’s Checklist for Chapter 9 10. Advanced Fraud Fraud—Here, There, and Everywhere Sarbanes-Oxley Act Employment Trust Fund Fraud External Fraud Beginning Finance Manager’s Checklist for Chapter 10 11. Where Will All This New Knowledge Take You? A Story Key Concepts Manager’s Checklist for Chapter 11 vii 170 173 178 185 185 186 188 189 190 192 193 196 199 202 203 206 208 209 Appendix: Resources, Accounting for Managers 211 Index 217 This page intentionally left blank. Preface A ccounting knowledge is a core business skill that both complements and enhances your other talents. Individuals promoted to management or supervisory roles from either line or staff jobs find that many of their new responsibilities involve knowing something about accounting. Congratulations on your promotion! You’ve come to the right place to start developing those accounting skills. If you haven’t had a recent promotion, more congratulations are in order. You are taking steps to gain the skills that will lead to promotion in the near future. Your new duties could involve record keeping or report preparation and forwarding the results to the appropriate department. You might also be involved in preparing or analyzing departmental budgets. Maybe you are in sales and have questions about why there isn’t more money for travel. Perhaps your company has a profit-sharing plan and you’re suddenly intensely interested in how profits are calculated. You could be working in a smaller business where you now have full responsibility for the production function and have to decide where and how to spend the money. Any of these events could trigger your awareness that you need to know something about accounting and how money works in an organization. You may work for one of the many levels of government or for a nonprofit organization. Although both government and nonprofits have separate accounting rules, most of the same basic functions apply across all the organizational types. I’ll touch on some of these differences as we travel through the book. As you go through this book, you’ll find that accounting concepts or information influence almost every decision you will ix Copyright 2003 by The McGraw-Hill Companies, Inc. 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Accounting for Managers - William H. Webster

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