Barron's Accounting Handbook Book

Preface vii

1 Financial Accounting: The Financial Statements 1

Income Statement Reporting 1

Balance Sheet 14

Statement of Cash Flows 34

2 Financial Accounting: Financial Reporting Requirements 45

Interim Reporting 45

Hierarchy of GAAP 47

FASB Accounting Standards Codification (ASC) 48

Accounting Changes 49

Prior Period Adjustments 51

Disclosure of Accounting Policies 52

Segmental Reporting 52

Imputing Interest on Notes 54

Business Combinations 55

Consolidation 60

Investments in Securities 64

Fair Value Measurements 70

Fair Value Option for Financial Assets and Financial Liabilities 72

Leases 78

Pension Plans 84

Income Tax Accounting 95

Foreign Currency Translation and Transactions 99

Financial Instruments 102

Related Parties 106

3 Management Accounting/Cost Management I 107

Introduction: The Role of Management Accounting 107

Cost Accounting vs. Cost Management 108

Part I Processing Cost Data for Cost Accumulation 116

Cost Concepts, Terms, and Classifications 116

Cost-Accumulation Systems 120

Costing Joint Products and By-products 132

Allocation of Service Department Costs to Production Departments 133

Activity-Based Costing 136

Activity-Based Management 140

Just-in-Time (JIT) and Total Quality Management (TQM) 147

Measuring Quality Costs 151

Backflush Costing 154

Throughput 154

Environmental Costs and Ecoefficiency 157

Life-Cycle Costs and Target Costing 161

Part II Using Cost Data for Planning 166

Cost Behavior Analysis-Analysis of Mixed Costs 166

Cost-Volume-Profit (CVP) and Break-Even Analysis 177

Absorption Versus Variable Costing 184

Budgeting for Profit Planning 188

A Shortcut Approach to Formulating the Budget 199

4 Management Accounting/Cost Management II 201

Part III Using Cost Data for Control 201

Responsibility Accounting: Introduction 201

Standard Costs and Variance Analysis for Cost Centers 202

Segmental Reporting for Profit Centers 226

Responsibility Accounting for Investment Centers 236

Balanced Scorecard 242

Transfer Pricing 244

Part IV Using Cost Data for Decision Making 249

Short-Term and Nonroutine Decisions 249

Capital Budgeting Decisions 259

How Does MACRS Affect Investment Decisions? 268

5 Financial Statement Analysis 274

Importance 274

Horizontal Analysis 275

Ratio Analysis 279

Summary and Limitations of Ratio Analysis 296

6 Individual Income Taxation: Preparation and Planning 308

How to Postpone Taxes 308

Sources of Tax-Exempt Income 309

How to Delay Paying Tax on Interest 311

Gains or Losses on Securities Transactions 312

Tax Strategies When Children Are Involved 313

Itemized Deductions 314

Self-Employment 319

Personal Exemptions 319

Standard Deduction 320

Tax Implications of Pension Plans 320

Real Estate Transactions 322

Gifts 323

Determination of Tax 324

Estate Planning 326

Advantages of Having a Trust 328

Alternative Minimum Tax 329

7 Dictionary of Accounting Terms 332

8 Information Technology in Accounting 778

Accounting Packages 778

Activity-Based Costing (ABC) Software 785

Spreadsheets (Electronic Worksheets) 788

Auditing Tasks 791

Spreadsheet-Program-Assisted Auditing 794

Tax Preparation and Planning 797

Using Database Management Systems (DBMS) 798

Software Systems That Impact Value Chain Management 799

Wireless Technology 800

9 Quantitative Methods for Accounting 816

Decision Making 816

Linear Programming and Shadow Pricing 821

Learning Curve 827

Inventory Planning 828

Program Evaluation and Review Technique (PERT) 835

10 Auditing and Internal Control Over Financial Reporting 841

Sarbanes-Oxley Act and the Public Company Accounting Oversight Board (PCAOB) 841

Audit Reports 843

Compilation of Financial Statements 851

Review of Financial Statements 853

Reports on Prospective Financial Statements 855

Audit Documentation 863

Internal Auditing 863

Section 404 of the Sarbanes-Oxley Act 865

The Sox Section 302 and Section 906 Considerations 875

11 Personal Financial Planning 882

Objectives of Personal Financial Planning 882

12 Governmental and Nonprofit Accounting 917

Characteristics of Nonbusiness Organizations 917

Governmental Accounting 919

Nonprofit Organizations and Financial Reporting 950

13 International Accounting and International Financial Reporting Standards (IFRS) 957

Introduction: Accounting Dimensions of International Business 958

Foreign Currency Exchange Rates 959

U.S. GAAP vs. IFRS 968

Required Financial Statements and Structural Differences in Primary Financial Reporting 969

IFRS Differences Affecting the Statement of Financial Position 971

IFRS Differences Affecting the Income Statement 976

14 Forensic Accounting 980

Why is Forensic Accounting Necessary? 981

When Does One Employ a Forensic Accountant? 982

Where Is a Forensic Accountant Used? 983

How Does a Forensic Accountant Work? 984

Forensic Accounting and Fraud Examination 985

Forensic Specialists' Investigation Procedure 987

Forensic Computing and the Use of Technology 988

IT and Data Mining Used to Detect Corporate Fraud 989

A Case in Forensic Accounting 990

Appendices 1006

Appendix A Summary of the Sarbanes-Oxley Act of 2002 1006

Appendix B Sarbanes-Oxley Compliance Practice Aid 1018

Index 1042