The Three Questions 1

Visualize to Understand 2

The Accounting System 5

Accounting from the Bottom Up 6

Double Entry 7

Bookkeeping and Accounting 12

Financial Statements 15

Accounting Principles 16

The Fundamental Equations of Accounting 18

The Advantages of an Accounting System 20

A Few Important Details 20

Manager’s Checklist for Chapter 1 24

Closing the GAAP 28

Zen Accounting 36

Checks and Balances 37

Audits 40

Manager’s Checklist for Chapter 244

The Lemonade Stand 45

Load, Wash, Rinse, Spin, Dry 47

Past as Prologue 49

The Income Statement 50

Statement of Cash Flows 53

A Delicate Balance: The Adjusting Entries 59

Manager’s Checklist for Chapter 3 63

What Measures Performance? 64

Liquidity Ratios 69

Activity Ratios 70

Debt Ratios 74

Profitability Ratios 75

Putting It All Together 78

Manager’s Checklist for Chapter 4 82

Management Accounting—for the Future 84

Cost/Volume/Profit Analysis 89

Manager’s Checklist for Chapter 5 101

Cost Behavior, Inventory, and Overhead 102

General Widget Company 112

Manager’s Checklist for Chapter 6 122

Why the Fuss? 123

Job-Order and Process Costing Systems 125

As Complex as ABC 132

Standard Costing 139

Static and Flexible Budgeting 143

Manager’s Checklist for Chapter 7 144

They Want It, but They Don’t Want It—Yet

They Still Need It 146

Balanced Scorecard 150

Hybrid Costing 156

Just-in-Time Inventory 156

Operation Costing Systems 159

Environmental/Full Cost Accounting 160

Target Costing 164

Transfer Pricing 166

Manager’s Checklist for Chapter 8 168

The Principal Taxes 173

Corporate Income and Deduction Tax Issues 178

Alternative Minimum Tax (AMT) 185

Tax Credits 185

Tax Practice 186

Manager’s Checklist for Chapter 9 188

Fraud—Here, There, and Everywhere 190

Sarbanes-Oxley Act 192

Employment Trust Fund Fraud 193

External Fraud 196

Beginning Finance 199

Manager’s Checklist for Chapter 10 202

A Story 206

Key Concepts 208

Manager’s Checklist for Chapter 11 209