Closing the Books. An Accountant s Guide. Steven M. Bragg

Transcription

1 Closing the Books An Accountant s Guide Steven M. Bragg

2 Chapter 1 The General Ledger and Other Ledgers... 1 Learning Objectives... 1 Introduction... 1 The Ledger Concept... 1 General Ledger Overview... 3 The Accounts Receivable Ledger... 4 The Purchase Ledger... 4 Summary... 5 Review Questions... 6 Review Answers... 7 Chapter 2 The Trial Balance... 8 Learning Objectives... 8 Introduction... 8 Overview of the Trial Balance... 8 The Trial Balance Format... 8 The Extended Trial Balance Trial Balance Error Correction The Post-Closing Trial Balance Evaluation of the Trial Balance Summary Review Questions Review Answers Chapter 3 Journal Entries Learning Objectives Introduction The Accruals Concept Adjusting Entries Reversing Entries Common Adjusting Entries Depreciation Allowance for Doubtful Accounts Accrued Revenue Accrued Expenses Prepaid Assets Closing Entries Journal Entry Efficiencies Immaterial Journal Entries Reversing Entries Journal Entry Templates Recurring Journal Entries Standard Journal Entry Checklist Journal Entry Responsibility Avoid Journal Entries Entirely Standardize Accounts Summary Review Questions Review Answers Chapter 4 The Closing Process Learning Objectives Introduction... 28

3 Prior Steps: Update Reserves Core Steps: Issue Customer Invoices Core Steps: Value Inventory Core Steps: Calculate Depreciation Core Steps: Accrue Expenses Core Steps: Consolidate Division Results Core Steps: Eliminate Intercompany Transactions Core Steps: Review Journal Entries Core Steps: Reconcile Accounts Core Steps: Close Subsidiary Ledgers Core Steps: Create Financial Statements Core Steps: Review Financial Statements Core Steps: Accrue Tax Liabilities Core Steps: Close the Month Core Steps: Calculate Earnings per Share Core Steps: Add Disclosures Core Steps: Write Cover Letter Core Steps: Issue Financial Statements Delayed Steps: Issue Customer Invoices Delayed Steps: Closing Metrics Delayed Steps: Document Future Closing Changes Delayed Steps: Update Closing Procedures Summary Review Questions Review Answers Chapter 5 Fine-Tune the Closing Process Learning Objectives Introduction Task Interdependency Analysis Correct Errors Early Reconcile Accounts Early Adjust Reserves Early Alter Overhead Allocations Early Review the Shipping Log Early Review Billable Hours Early Accrue Early Accelerate Depreciation Calculations Examine Commissions Early Standardize the Accounting System Centralize the Accounting System Centralize Travel Bookings Process Centering Mitigate Information Dependencies Standardize the Report Layout Reduce the Financial Statements Collect Report Information Early Electronic Delivery Defer Activities Automation Solutions Intercompany Transactions Consolidation Software Enterprise Resources Planning Systems Workflow Management Systems Incremental Automation Automation Summary ii

4 Ongoing Process Improvements Summary Review Questions Review Answers Chapter 6 Closing Cash Learning Objectives Introduction Overview of the Bank Reconciliation The Bank Reconciliation Procedure Bank Reconciliation Problems The Bank Reconciliation Statement The Timing of the Bank Reconciliation Negative Cash on the Balance Sheet Closing Petty Cash Summary Review Questions Review Answers Chapter 7 Closing Accounts Receivable Learning Objectives Introduction The Shipping Log Interface Revenue Accruals Revenue Recognition Rules Treatment of Deferred Revenue Issues with Subcontractors Recurring Invoices Rebillable Expenses Reconciling Accounts Receivable Non-Trade Receivables The Allowance for Doubtful Accounts Recording Contra Revenue Summary Review Questions Review Answers Chapter 8 Closing Inventory Learning Objectives Introduction Valuation Step 1: The Quantity of Inventory on Hand The Periodic Inventory System The Perpetual Inventory System The Gross Profit Method Valuation Step 2: Inventory Costing The First In, First Out Method The Last In, First Out Method The Weighted Average Method Standard Costing The Retail Inventory Method Valuation Step 3: Overhead Allocation The Lower of Cost or Market Rule The Lower of Cost or Market Rule Obsolete Inventory Accounting Summary Review Questions iii

5 Review Answers Chapter 9 Closing Fixed Assets Learning Objectives Introduction Initial Asset Recognition The Depreciation Entry Interest Capitalization Asset Impairment Reconciling Fixed Assets Summary Review Questions Review Answers Chapter 10 Closing Accounts Payable Learning Objectives Introduction Accounts Payable Accruals Invoice Approval Delays Expense Reports Issues with the Credit Card Close Accounts Payable Suspense Items Issues with Subcontractors Reconciling Accounts Payable Summary Review Questions Review Answers Chapter 11 Closing Payroll Learning Objectives Introduction The Wage Accrual The Commission Accrual The Bonus Accrual The Payroll Tax Accrual The Benefits Accrual The Vacation Accrual Reconciling Compensation Accruals Summary Review Questions Review Answers Chapter 12 The Income Statement Learning Objectives Introduction Income Statement Overview The Single-Step Income Statement The Multi-Step Income Statement The Condensed Income Statement The Contribution Margin Income Statement The Multi-Period Income Statement How to Construct the Income Statement Summary Review Questions Review Answers iv

6 Chapter 13 The Balance Sheet Learning Objectives Introduction Overview of the Balance Sheet The Common Size Balance Sheet The Comparative Balance Sheet How to Construct the Balance Sheet Summary Review Questions Review Answers Chapter 14 The Statement of Cash Flows Learning Objectives Introduction Overview of the Statement of Cash Flows The Direct Method The Indirect Method How to Prepare the Statement of Cash Flows Summary Review Questions Review Answers Chapter 15 The Statement of Retained Earnings Learning Objectives Introduction Overview of the Statement of Retained Earnings How to Prepare the Statement of Retained Earnings Summary Review Questions Review Answers Chapter 16 Financial Statement Disclosures Learning Objectives Introduction Accounting Disclosures Summary Review Questions Review Answers Chapter 17 Segment Reporting Learning Objectives Introduction Primary Segment Reporting Issues The Segment Report Summary Review Questions Review Answers Chapter 18 Interim Reporting Learning Objectives Introduction The Integral View The Discrete View Comparison of the Integral and Discrete Views Changes in Accounting Principle Changes in Accounting Estimate v

7 Interim Reporting Issues Summary Review Questions Review Answers Chapter 19 Earnings per Share Learning Objectives Introduction Basic Earnings per Share Diluted Earnings per Share Presentation of Earnings per Share Summary Review Questions Review Answers Chapter 20 The Public Company Close Learning Objectives Introduction The Public Company Closing Process The Form 10-Q The Form 10-K Summary Review Questions Review Answers Chapter 21 Controls for Closing the Books Learning Objectives Introduction Basic Controls Basic Controls Additional Controls for Public Companies Balancing Controls against Speed Summary Review Questions Review Answers Chapter 22 Record Keeping Learning Objectives Introduction Month-End Record Keeping Year-End Record Keeping Public Company Record Keeping Summary Review Questions Review Answers Appendix A Selected Topics Appendix B The Closing Checklist Appendix C Case Study Glossary Index vi