The Everything Accounting Book: Balance Your Budget, Manage Your Cash Flow, And Keep Your Books in the Black (Everything: Business and Personal Finance) – Michele Cagan

Top Ten Accounting Mistakes / x
Introduction / xi
1 Accounting Is More Than Numbers / 1
Tracking and Measuring Success 2 • Accounting Versus Bookkeeping 2
• Who Uses Accounting Information? 4 • Different Versions for Different
Reasons 5 • Who’s Who in Accounting 7 • How Accountants Can Help You
8 • Pick the Right Accounting Professional 11
2 The Basic Accounts / 13
Accounting Starts with Accounts 14 • Understanding Assets 15 • A Look at
Liabilities 16 • All about Equity 17 • Revenues, Costs, and Expenses 18 •
How the Accounts Connect 20 • Debits and Credits 22
3 Keeping Track of Transactions / 25
What Counts as a Transaction 26 • When to Record Transactions 26 •
Setting Up Your Accounts 29 • Meet the General Ledger 33 • The Daily
Journals 34 • It’s All in the Posting 39 • Checking It Twice 41 • The
Accounting Cycle 43
4 Setting Up a System / 45
Get (and Stay) Organized 46 • Software Makes It Simpler 49 • Mapping
Out Your Accounting Processes 50 • The Everyday Transactions 55 •
Reconciling Your Accounts 56 • What to Keep, What to Toss 59
5 The Accounting Equation / 63
Every Business Has Assets 64 • Breaking Out Asset Categories 64 •
A Closer Look at Fixed Assets 68 • Liabilities Are What Your Company Owes
72 • Equity Means Ownership 74 • Assets Equal Liabilities Plus Equity 75

The everyt hing accoun t ing book
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6 Recording Your Revenues / 77
What Are You Selling? 78 • The Basics of Sales Transactions 79 •
Develop a Sales Journal 82 • Simple Cash Sales 83 • Selling on Account
84 • Collecting Sales Tax 86 • Dealing with Special Sales Transactions
87 • When a Sale Is Not a Sale 90
7 The Inventory-Cost Connection / 91
Inventory Transforms into Cost of Goods 92 • What Goes into Inventory
Costs? 94 • Set Up Your Purchases Journal 95 • Four Ways to Value
Inventory 96 • Extra Steps for Manufacturers 99 • Figure Out Cost of
Goods Sold 100
8 Standard Operating Expenses / 103
A Look at Expense Categories 104 • What Goes into Selling Costs 104
• Understanding Overhead 106 • All about Depreciation 109 • Don’t
Forget Amortization 111 • Employees Cause a Lot of Transactions 112
• Recording Expense Transactions 113
9 Managing the Payroll / 115
A Big Pile of Forms 116 • All about Payroll Taxes 119 • Employee
Benefits and Bonuses 121 • Calculating Take-Home Pay 122 • Payroll
Tax Reporting and Filing 127 • Never Mess Around with Payroll Taxes
129 • Still Want to Do It Yourself? 130
10 Always Know Your Cash / 131
The Importance of Having Cash 132 • Earning Profits but Out of Cash
132 • The Basics of Cash Flow 133 • Tracking Your Incoming Cash 135
• Recording Your Outgoing Cash 136 • Reconcile Your Bank Statement
137 • What to Do When Cash Runs Low 139
11 Handling Customer Credit / 141
Why Sell on Credit? 142 • Establish Your Credit Policies 144 • Don’t
Give Credit to Just Anyone 146 • Creating Invoices and Account
Statements 148 • Dealing with Collections 150 • Accounting for
Accounts Receivable Transactions 152
12 Controlling Purchase Costs / 153
Know What You Want Before You Buy 154 • Choose Your Vendors
Wisely 155 • Getting Vendors to Extend Credit 157 • Creating Purchase
Orders 159 • Dealing with Purchase Problems 160 • Review Their
Invoices 161 • Recording Accounts Payable Transactions 161
13 The End of Period Cleanup / 163
Accounting Periods 164 • The Working Trial Balance 166 • Making
Adjusting Entries 167 • Accounting for Accruals 170 • Prelude to
Financial Statements 173 • Closing the Books 174
14 Preparing Financial Statements / 177
Three Major Financial Statements 178 • How These Statements
Interconnect 178 • The Statement of Profit and Loss 179 • The Balance
Sheet 184 • The Statement of Cash Flows 188
15 Different Entities Mean Different Equity / 191
Meet the Business Entities 192 • Which One Is Best for Your
Business? 192 • Accounting for Sole Proprietorships 194 • Accounting for Partnership Equity 195 • Distributing Partnership Profits and
Losses 196 • The Corporate Equity Section 198 • Dealing with
Dividends 201
16 The Income Tax Impact / 203
Financial Statements Flow into Tax Returns 204 • Different Income
Taxation for Different Entities 204 • Introducing Business Tax Forms
205 • Different Ways to Pay Yourself 208 • Your Payment Strategy
Impacts Your Personal Taxes 210 • Tax Planning Strategies 213
17 The Best Use of Your Financial Statements / 215
What Can Your Statements Tell You? 216 • Vertical and Horizontal
Analysis 217 • Calculating Crucial Financial Ratios 221 • Nipping
Problems in the Bud 226 • A Basis for Decision-Making 228 • Boosting
Profitability and Positive Cash Flow 228 • When You Need Outside
Funding 230
The everyt hing accoun t ing book
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18 More Ways Accounting Helps Your Business / 231
Know Your Costs to Set Your Prices 232 • The Break-Even Analysis 233
• Developing Pro Forma Statements 235 • Sticking to a Budget 236
• Financing Major Purchases 237 • Management Accounting 238 •
The Importance of Internal Controls 239 • Using Internal Audits to Your
Advantage 242
19 Unique Issues for Specific Businesses / 243
Common and Not-So-Common Transactions 244 • Retail Is More Than
Buying and Selling 244 • Manufacturers Produce Special Transactions
245 • Accounting for Your Home-Based Business 247 • Small HighTech Companies 250 • Building Construction Transactions 251
20 Retirement Plans / 255
The Best Tax Shelter 256 • Individual Retirement Accounts (IRAs) 258
• SIMPLE Plans 260 • Simplified Employee Pensions (SEPs) 262 •
Keogh Plans 264 • Choosing the Right Plan for You 265 • Accounting
for Contributions 266
21 Common Small-Business Tax Snafus / 269
Don’t Be Afraid of the IRS 270 • Employees Versus Contractors 271 •
Salaries, Dividends, or Loans? 273 • Tracking Travel Expenses 277 •
About Fringe Benefits 279 • Keeping Things Separate 280
Appendix A: Glossary / 281
Appendix B: Small-Business Resources
on the Internet / 284
Index / 286