Accounting for Managers

Transcription

1 Accounting for Managers 2 nd Edition Steven M. Bragg

2 Chapter 1 The Need for Accounting Information... 1 Learning Objectives... 1 Introduction... 1 The Accountancy Concept... 1 Financial and Managerial Accounting... 2 Decisions Requiring Accounting Information... 3 The Structure of this Book... 4 Summary... 5 Review Questions... 6 Review Answers... 7 Chapter 2 Introduction to Accounting... 9 Learning Objectives... 9 Introduction... 9 Accounting Frameworks... 9 Accounting Principles The Accounting Cycle Accounting Transactions Source Documents Double Entry Accounting The Ledger Concept The General Ledger Accounts Receivable Ledger Purchase Ledger Journal Entries Major Journal Entries The Accruals Concept The Realization Concept The Trial Balance Accrual Basis of Accounting Cash Basis of Accounting Summary Review Questions Review Answers Chapter 3 The Financial Statements Learning Objectives Introduction The Income Statement 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 The Balance Sheet Overview of the Balance Sheet The Common Size Balance Sheet The Comparative Balance Sheet The Statement of Cash Flows Overview of the Statement of Cash Flows The Direct Method The Indirect Method The Statement of Retained Earnings... 40

3 Overview of the Statement of Retained Earnings Financial Statement Footnotes Consolidated Financial Statements Interim Financial Statements Pro Forma Financial Statements Financial Statement Audits, Reviews, and Compilations Summary Review Questions Review Answers Chapter 4 Interpretation of Financial Statements Learning Objectives Introduction Interpretation of Financial Statements Horizontal Analysis Vertical Analysis Cash Coverage Ratio Current Ratio Quick Ratio Liquidity Index Accounts Payable Turnover Ratio Accounts Receivable Turnover Ratio Inventory Turnover Ratio Fixed Asset Turnover Ratio Sales to Working Capital Ratio Debt to Equity Ratio Fixed Charge Coverage Breakeven Point Gross Profit Ratio Net Profit Ratio Return on Net Assets Return on Equity Limitations of Ratio Analysis Effect of the Number of Days in a Month Summary Review Questions Review Answers Chapter 5 Evaluation of Responsibility Centers Learning Objectives Introduction Responsibility Reporting Functional Organizational Structure Divisional Organizational Structure The Structure of the Chart of Accounts Three-Digit Chart of Accounts Five-Digit Chart of Accounts Seven-Digit Chart of Accounts Responsibility Center Information Reporting Transfer Pricing Market Price Basis Adjusted Market Price Basis Negotiated Basis Contribution Margin Basis Cost Plus Basis Cost Anomalies in a Cost-Based Transfer Price Pricing Problems Caused by Transfer Pricing ii

4 Tax Impact of Transfer Prices Accounting Issues Related to Responsibility Centers Summary Review Questions Review Answers Chapter 6 Overview of Selected Accounting Standards Learning Objectives Introduction Accounting Changes and Error Corrections Advertising Capitalized Interest Compensated Absences Contingencies Deferred Compensation Fixed Assets Inventory First In, First Out Method Last In, First Out Method Weighted Average Method Specific Identification Method Research and Development Subsequent Events Stock-Based Compensation Taxes Summary Review Questions Review Answers Chapter 7 Sales and Marketing Decisions Learning Objectives Introduction Contribution Margin Breakeven Point Margin of Safety Cost-Volume-Profit Analysis Sales Mix Accounting Inputs to Price Formulation Cost Plus Pricing Time and Materials Pricing Breakeven Pricing Price Elasticity of Demand Cross Price Elasticity of Demand Non-Price Determinants of Demand Summary Review Questions Review Answers Chapter 8 Human Resources Decisions Learning Objectives Introduction Payroll Cycles Time Tracking Issues Time Tracking Scope Employee Exclusions Data Collection Scope Payroll Deduction Issues iii

5 Payroll Tax Remittance Issues Definition of an Employee Accrued Bonuses The Common Paymaster Rule Unemployment Insurance Issues The Employee Cost Object The True Variability of Direct Labor Compensation Cost Reduction Proactive Hiring Solutions Temporary Cost Reductions Permanent Cost Reductions Summary Review Questions Review Answers Chapter 9 Investment Decisions Learning Objectives Introduction The Investment Decision Payback Analysis Discounted Payback Accounting Rate of Return Time Value of Money Present and Future Value Tables Net Present Value Internal Rate of Return Incremental Internal Rate of Return Terminal Value Real Options Complex Systems Analysis Research and Development Funding Analysis Accounting Issues Related to Investment Decisions Impairment of Fixed Assets Impairment of Securities Impairment of Investments in Other Entities Summary Review Questions Review Answers Chapter 10 Acquisition Decisions Learning Objectives Introduction Accounting Due Diligence Impact on Earnings per Share Tax Issues in an Acquisition Tax Issues for the Seller Tax Issues for the Acquirer Issues with Stock Purchases General IRS Requirements to Avoid Gain Recognition The Type A Acquisition The Type B Acquisition The Type C Acquisition The Type D Acquisition Triangular Mergers The Triangular Merger The Reverse Triangular Merger The Asset Acquisition iv

6 Impact of the Acquiree Organizational Form Summary of Legal Structures Accounting Integration Summary Review Questions Review Answers Chapter 11 Cost Accounting Tools and Concepts Learning Objectives Introduction Direct Costing Direct Costing as a Managerial Tool Automation Investments Cost Reporting Customer Profitability Profit-Volume Relationship Outsourcing Direct Costing Pitfalls The Problem With Overhead Allocation Activity-Based Costing Activity-Based Management Summary Review Questions Review Answers Chapter 12 Target Costing Learning Objectives Introduction The Basic Steps of Target Costing Value Engineering Considerations The Cost Reduction Program The Milestone Review Process Problems with Target Costing The Members of a Design Team The Role of Accounting in Target Costing Data Sources for Target Costing The Product Life Cycle and Target Costing Summary Review Questions Review Answers Chapter 13 Constraint Analysis Learning Objectives Introduction Constraint Analysis Operational Terminology Overview of Constraint Analysis The Cost of the Bottleneck Local Optimization Constraint Analysis Financial Terminology Constraint Analysis from a Financial Perspective The Constraint Analysis Model The Decision to Sell at a Lower Price The Decision to Outsource Production The Capital Investment Decision The Decision to Cancel a Product Summary Review Questions Review Answers v

7 Chapter 14 Budgeting Concepts Learning Objectives Introduction The System of Budgets The Reasons for Budget Iterations Overview of the Revenue Budget The Ending Finished Goods Inventory Budget The Production Budget Production Budgeting for Multiple Products The Direct Materials Budget (Roll up Method) The Direct Materials Budget (Historical Method) The Direct Labor Budget The Manufacturing Overhead Budget The Sales and Marketing Budget Diminishing Returns Analysis The Research and Development Budget The Administration Budget The Compensation Budget The Budgeted Income Statement The Budgeted Balance Sheet Accounts Receivable Inventory Fixed Assets Accounts Payable Additional Estimation Elements The Cash Line Item The Financing Budget The Compiled Balance Sheet Summary Review Questions Review Answers Chapter 15 Budgetary Control Learning Objectives Introduction General Reporting Format Revenue Reporting Sales Volume Variance Overview of Cost of Goods Sold Variance Reporting The Purchase Price Variance Material Yield Variance Labor Rate Variance Labor Efficiency Variance Variable Overhead Spending Variance Variable Overhead Efficiency Variance Fixed Overhead Spending Variance Problems with Variance Analysis Which Variances to Report Summary Review Questions Review Answers Glossary Index vi