The Accounting Cycle eBook

| March 20, 2013 | 0 Comments

the-accounting-cycleThis book is the first of seven books which introduces the basic principles of accounting. It introduces accounting, the fundamental accounting equation, and four core financial statements. Students will learn the basics of accounting, such as debits and credits, the journal, and trial balance, income measurement, revenue and expense recognition, and the reporting cycle. With a foundation in these basics of accounting readers are introduced to financial statement preparation, the accounting cycle, closing entries, classified balance sheets, the importance of business liquidity, and the concept of the operating cycle.

Content

Part 1: Welcome to the World of Accounting

1. Accounting Information

  • 1.1 Accounting Defined
  • 1.2 Financial Accounting
  • 1.3 Managerial Accounting
  • 1.4 A Quality Information System
  • 1.5 Inherent Limitations

2. The Accounting Profession and Careers

  • 2.1 Accounting and Professional Ethics

3. The Fundamental Accounting Equation

  • 3.1 Assets
  • 3.2 Liabilities
  • 3.3 Owners’ Equity
  • 3.4 Balance Sheet

4. How Transactions Impact the Accounting Equation

  • 4.1 Edelweiss Collects an Account Receivable
  • 4.2 Edelweiss Buys Equipment With Loan Proceeds
  • 4.3 Edelweiss Provides Services to a Costumer on Account
  • 4.4 Edelweiss Pays Expenses With Cash
  • 4.5 Generalizing About the Impact of Transactions
  • 4.6 Distinguishing Between Revenue and Income

5. The Core Financial Statements

  • 5.1 Financial Statements
  • 5.2 Income Statements
  • 5.3 The Statement of Retained Earnings
  • 5.4 Balance Sheet
  • 5.5 Statement of Cash Flows
  • 5.6 Articulation
  • 5.7 Unlocking the Mystery of Articulation

Part 2: Information Processing

6. Accounts, Debits and Credits

  • 6.1 Accounts
  • 6.2 Debits and Credits
  • 6.3 The Fallacy of “+/-” Nomenclature
  • 6.4 The Debit/Credit Rules
  • 6.5 Assets/Expenses/Dividends
  • 6.6 Liabilities/Revenues/Equity
  • 6.7 Analysis of Transactions and Events
  • 6.8 Determining an Account’s Balance
  • 6.9 A Common Misunderstanding About Credits

7. The Journal

  • 7.1 Illustrating the Accounting Journal
  • 7.2 Special Journals
  • 7.3 Page Numbering
  • 7.4 But, What are the Account Balances?

8. The General Ledger

  • 8.1 Posting
  • 8.2 To Review

9. The Trial Balance

  • 9.1 Debits Equal Credits
  • 9.2 Financial Statements From the Trial Balance

10. Computerized Processing Systems

  • 10.1 What do they Look Like

11. T-accounts

  • 11.1 Comprehensive T-accounting Illustration
  • 11.2 Chart of Accounts
  • 11.3 Control and Subsidiary Accounts

Part 3: Income Measurement

12. “Measurement Triggering” Transactions and Events

  • 12.1 The Meaning of  “Accounting” Income
  • 12.2 More Income Terminology
  • 12.3 An Emphasis on Transactions and Events

13. The Periodicity Assumption

  • 13.1 Accounting Implications

14. Basic Elements of Revenue Recognition

  • 14.1 Payment and Revenue Recognition

15. Basic Elements of Expense Recognition

  • 15.1 Payment and Expense Recognition

16. The Adjusting Process and Related Entries

  • 16.1 Illustration of Prepaid Insurance
  • 16.2 Illustration of Prepaid Rent
  • 16.3 I’m a Bit Confused – Exactly When do I Adjust?
  • 16.4 Illustration of Supplies
  • 16.5 Depreciation
  • 16.6 Unearned Revenues
  • 16.7 Accruals
  • 16.8 Accrued Salaries
  • 16.9 Accrued Interest
  • 16.10 Accrued Rent
  • 16.11 Accrued Revenue
  • 16.12 Recap of Adjustments
  • 16.13 The Adjusted Trial Balance
  • 16.14 Alternative Procedures for Certain Adjustments

17. Accrual- Versus Cash-Basis Accounting

  • 17.1 Modified Approaches
  • 17.2 Illustration of Cash-Versus Accrual Basis Accounting

Part 4: The Reporting Cycle

18. Preparing Financial Statements

  • 18.1 An Illustration
  • 18.2 Considering the Actual Process for Adjustments
  • 18.3 Financial Statements
  • 18.4 Computerization
  • 18.5 A Worksheet Approach
  • 18.6 An Additional Illustration

19. The Accounting Cycle and Closing Process

  • 19.1 The Closing Process
  • 19.2 Post Closing Trial Balance
  • 19.3 Revisiting Computerization

20. Reversing Entries

21. Classified Balance Sheets

  • 21.1 Assets
  • 21.2 Liabilities
  • 21.3 Equity
  • 21.4 Other Entity Forms
  • 21.5 Notes to the Financial Statements

22. Business Liquidity and the Operating Cycle

  • 22.1 Working Capital
  • 22.2 Current Ratio
  • 22.3 Quick Ratio



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About the author

Larry M. Walther, Ph.D., CPA, CMA, is the Ernst & Young Professor and Head of the School of Accountancy at Utah State University. Dr. Walther has authored numerous accounting textbooks and articles, and has served as director and/or consultant to a number to a number of public and nonpublic companies. Dr. Walther obtained his Ph.D. in accounting from Oklahoma State University and has public accounting experience with Ernst & Young. He currently serves as the accounting accreditation committee of the AACSB and is past president for the federation of schools of accountancy.

Dr. Chris Skousen obtained his Ph.D. at Oklahoma State University. He earned MBA and BA degrees from Utah State University. Dr. Skousen gained public accounting auditing experience with KPMG in their Portland, Oregon office, and as an intern in their in Düsseldorf, Germany office, and at Squire & Co. Dr. Skousen has taught accounting at Utah State University, The University of Texas at Arlington, Oklahoma State University, and Brigham Young University-Idaho. He has published in Accounting Horizons, Behavior Research in Accounting, Accounting and the Public Interest, and other journals.

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