Accounting for Managers

238 Pages·2003·2.71 MB·english

by  William Webster

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Accounting
for Managers
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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 chap-
ters, information on the authors, discussion guides for using
these books in training programs, and more.
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A
B r iBe of coaks e
Accounting
for Managers
William H. Webster, CPA
McGraw-Hill
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DOI: 10.1036/0071436472
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Contents
Preface ix
1. How to Speak Accounting 1
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
2. Concepts and Principles, Checks and Balances 26
Closing the GAAP 28
Zen Accounting 36
Checks and Balances 37
Audits 40
Manager’s Checklist for Chapter 2 44
3. Financial Statements 45
The Lemonade Stand 45
Load, Wash, Rinse, Spin, Dry 47
Past as Prologue 49
The Income Statement 50
Statement of Cash Flows 53
The Balance Sheet 57
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vi Contents
A Delicate Balance: The Adjusting Entries 59
Manager’s Checklist for Chapter 3 63
4. Financial Ratios 64
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
5. Management Accounting 83
Management Accounting—for the Future 84
Cost/Volume/Profit Analysis 89
Manager’s Checklist for Chapter 5 101
6. Management Cost Accounting 102
Cost Behavior, Inventory, and Overhead 102
General Widget Company 112
Manager’s Checklist for Chapter 6 122
7. Cost Accounting in Action 123
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
8. Other Management Accounting Systems 146
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
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Contents vii
9. Taxation 170
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
10. Advanced Fraud 189
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
11. Where Will All This New Knowledge Take You? 203
A Story 206
Key Concepts 208
Manager’s Checklist for Chapter 11 209
Appendix: Resources, Accounting for Managers 211
Index 217
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Preface
Accounting 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 analyz-
ing 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 respon-
sibility 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 non-
profits 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
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