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Accounting All-in-One For Dummies

Book Description

A one-stop accounting reference

Packed with vital information culled from the extensive For Dummies accounting, bookkeeping, and auditing libraries, Accounting All-in-One For Dummies is a powerful, one-stop reference.

Accounting All-in-One For Dummies is a comprehensive resource on a variety of accounting concepts. You'll get up to speed on: setting up your accounting system; recording accounting transactions; adjusting and closing entries; preparing income statements and balance sheets; planning and budgeting for your business; handling cash and making purchase decisions; and more.

  • Ways to report on your financial statements

  • How to make savvy business decisions

  • Auditing and detecting financial fraud

Accounting All-in-One For Dummies is a one-stop reference for students studying the application of accounting theories and a valuable desk reference for accounting professionals in the workforce.

Table of Contents

    1. Introduction
      1. About This Book
      2. Foolish Assumptions
      3. Icons Used in This Book
      4. Beyond the Book
      5. Where to Go from Here
    2. Book I: Setting Up Your Accounting System
      1. Chapter 1: Grasping Bookkeeping and Accounting Basics
        1. Knowing What Bookkeeping and Accounting Are All About
          1. Distinguishing between bookkeeping and accounting
          2. Taking a panoramic view of bookkeeping and accounting
        2. Wrapping Your Brain around the Accounting Cycle
        3. Working the Fundamental Accounting Equation
      2. Chapter 2: Outlining Your Financial Road Map with a Chart of Accounts
        1. Getting to Know the Chart of Accounts
          1. Connecting the chart of accounts to financial statements
          2. Organizing the accounts
          3. Balancing transactions
        2. Setting Up Your Chart of Accounts
        3. Mulling Over Debits versus Credits
        4. Understanding Double-Entry Accounting
          1. Revisiting the balance sheet equation
          2. Recording journal entries
          3. Figuring out a complex journal entry
      3. Chapter 3: Using Journal Entries and Ledgers
        1. Keeping a Journal
          1. Using journals to record cash transactions
          2. Recording accrual transactions
          3. Exploring other journals
          4. Checking out examples of common journal entries
        2. Bringing It All Together in the Ledger
          1. Realizing what a ledger is
          2. Posting to the ledgers
          3. Viewing an example of a general ledger
          4. Recognizing the purpose of the trial balance
        3. Putting Accounting Software to Work for You
      4. Chapter 4: Choosing an Accounting Method
        1. Distinguishing between Cash and Accrual Basis
          1. The cash basis
          2. The accrual basis
        2. Sorting through Standards for Other Types of Accounting
          1. Managerial accounting
          2. Not-for-profit accounting
          3. Governmental accounting
          4. International accounting
        3. Considering the Conceptual Framework of Financial Accounting
          1. The objective of financial reporting
          2. Characteristics of accounting information
          3. Elements of the financial statements
          4. Financial statement measurements
    3. Book II: Recording Accounting Transactions
      1. Chapter 1: Keeping the Books
        1. Analyzing the Effect of Business Transactions
          1. Revisiting the fundamental accounting equation
          2. Getting familiar with accounts
          3. Defining debits and credits
          4. Knowing more about the transaction methodology
        2. Managing Your Bookkeeping and Accounting System
          1. Categorizing your financial information: The chart of accounts
          2. Standardizing source document forms and processing procedures
          3. Hiring competent personnel
          4. Enforcing strong internal controls
        3. Wrapping Up with End-of-Period Procedures
          1. Tidying up the books
          2. Leaving good audit trails
          3. Staying alert for unusual events and developments
          4. Designing truly useful reports for managers
      2. Chapter 2: Tracking Purchases
        1. Keeping Track of Inventory
          1. Entering initial cost
          2. Managing inventory and its value
        2. Buying and Monitoring Supplies
        3. Staying on Top of Your Bills
          1. Segregating duties to prevent theft
          2. Taking advantage of discounts
      3. Chapter 3: Counting Your Sales
        1. Collecting on Cash Sales
          1. Discovering the value of sales receipts
          2. Recording cash transactions in the books
        2. Selling on Credit
          1. Deciding whether to offer store credit
          2. Recording store credit transactions in the books
        3. Proving Out the Cash Register
        4. Tracking Sales Discounts
        5. Recording Sales Returns and Allowances
        6. Monitoring Accounts Receivable
        7. Accepting Your Losses
      4. Chapter 4: Processing Employee Payroll and Benefits
        1. Staffing Your Business
          1. Completing government forms
          2. Picking pay periods
          3. Determining wage and salary types
        2. Collecting Employee Taxes
          1. Sorting out Social Security tax
          2. Making sense of Medicare tax
          3. Figuring out federal withholding tax
          4. Settling up state and local withholding taxes
        3. Determining Net Pay
        4. Surveying Your Benefits Options
          1. Tax-exempt benefits
          2. Taxable benefits
          3. Dealing with cafeteria plans
        5. Preparing Payroll and Posting It in the Books
          1. Calculating payroll for hourly employees
          2. Doling out funds to salaried employees
          3. Totaling up for commission checks
          4. Putting it together to prepare payroll
        6. Depositing Employee Taxes
      5. Chapter 5: Computing and Reporting Payroll Taxes
        1. Paying Employer Taxes on Social Security and Medicare
          1. Filing Form 941
          2. Knowing how often to file
        2. Completing Unemployment Reports and Paying Unemployment Taxes
          1. How states calculate the FUTA tax rate
          2. Calculating FUTA tax
          3. Filing and paying unemployment taxes to state governments
        3. Carrying Workers’ Compensation Insurance
        4. Maintaining Employee Records
    4. Book III: Adjusting and Closing Entries
      1. Chapter 1: Depreciating Your Assets
        1. Defining Depreciation
          1. Knowing what you can and can't depreciate
          2. Figuring out the useful life of a fixed asset
          3. Delving into cost basis
        2. Evaluating Your Depreciation Options
          1. Walking through the straight-line method
          2. Accelerating by using declining balance
          3. Calculating sum-of-the-years’-digits
          4. Using the units-of-production method
          5. Seeing how the methods compare
          6. Figuring partial year depreciation
        3. Tackling Taxes and Depreciation
          1. Section 179
          2. MACRS
      2. Chapter 2: Paying and Collecting Interest
        1. Deciphering Types of Interest
          1. Simple interest
          2. Compound interest
        2. Handling Interest Income
        3. Delving into Loans and Interest Expenses
          1. Short-term debt
          2. Long-term debt
      3. Chapter 3: Proving Out the Cash
        1. Why Prove Out the Cash?
        2. Making Sure Ending Cash Is Right
        3. Closing the Cash Journals
          1. Finalizing cash receipts
          2. Finalizing cash outlays
        4. Using a Temporary Posting Journal
      4. Chapter 4: Reconciling Accounts and Closing Journal Entries
        1. Reconciling Bank Accounts
          1. Tracking down reconciling items
          2. Using a computerized system
        2. Posting Adjustments and Corrections
        3. Prepping to Close: Checking for Accuracy and Tallying Things Up
          1. Paying attention to initial transaction details
          2. Summarizing journal entries
          3. Analyzing summary results
          4. Planning for cash flow
        4. Posting to the General Ledger
        5. Checking Out Computerized Journal Records
      5. Chapter 5: Checking Your Accuracy
        1. Working with a Trial Balance
          1. Conducting your trial balance
          2. Dealing with trial balance errors
        2. Testing Your Balance by Using Computerized Accounting Systems
        3. Developing a Financial Statement Worksheet
        4. Replacing Worksheets with Computerized Reports
      6. Chapter 6: Adjusting the Books
        1. Adjusting All the Right Areas
          1. Depreciating assets
          2. Allocating prepaid expenses
          3. Counting inventory
          4. Allowing for bad debts
          5. Recognizing unpaid salaries and wages
        2. Testing an Adjusted Trial Balance
    5. Book IV: Preparing Income Statements and Balance Sheets
      1. Chapter 1: Brushing Up on Accounting Standards
        1. Exploring the Origins of Accounting Standards
        2. Recognizing the Role of the American Institute of Certified Public Accountants (AICPA)
          1. Tying together regulators for audits of publicly traded companies
          2. ASB audit and attestation standards
          3. AICPA Code of Professional Conduct
        3. Checking Out the U.S. Securities and Exchange Commission (SEC)
        4. Getting to Know the Financial Accounting Standards Board (FASB)
          1. Understanding generally accepted accounting principles (GAAP)
          2. Looking online for FASB standards
          3. Pick a standard: Domestic or international
      2. Chapter 2: Preparing an Income Statement and Considering Profit
        1. Understanding the Nature of Profit
        2. Choosing the Income Statement Format
        3. Deciding What to Disclose in the Income Statement
          1. Considering expense disclosure
          2. Presenting the right amount of expense information
        4. Examining How Sales and Expenses Change Assets and Liabilities
          1. Sizing up a business's financial condition
          2. Noting how accounting transactions affect the income statement and balance sheet
        5. Considering the Diverse Financial Effects of Making a Profit
          1. Introducing T-accounts
          2. Combining activity into one journal entry
          3. Explaining additional transactions related to profit
        6. Reporting Extraordinary Gains and Losses
          1. Segregating the income statement
          2. Considering business disruptions
          3. Questioning whether activity is truly unusual
        7. Correcting Common Misconceptions about Profit
          1. Clearing up profit misconceptions
          2. Comparing to industry standards
          3. Waving the red flag when you see revenue and credit sales increase
      3. Chapter 3: Assessing the Balance Sheet’s Asset Section
        1. Homing in on Historic Cost
        2. Discovering What Makes an Asset Current
          1. Cash
          2. Short-term investments
          3. Accounts receivable
          4. Notes receivable
          5. Inventory
          6. Prepaid expenses
        3. Keeping Track of Noncurrent (Long-Term) Assets
          1. Meeting the tangibles: Property, plant, and equipment (PP&E)
          2. Investigating intangible assets
        4. Exploring the Asset Section of the Balance Sheet
      4. Chapter 4: Digging for Debt in the Balance Sheet’s Liabilities Section
        1. Seeing How Businesses Account for Liabilities
        2. Keeping Current Liabilities under Control
          1. Accounts payable
          2. Payroll and taxes
          3. Unearned revenue
          4. Other short-term liabilities
        3. Planning for Long-Term Obligations
          1. Financing asset purchases with debt versus equity
          2. Managing long-term debt
          3. Anticipating contingent liabilities
        4. Accounting for Bond Issuances
          1. Mulling over bond basics
          2. Examining sample bond transactions
          3. Journaling bond transactions
      5. Chapter 5: Explaining Ownership in the Equity Section of the Balance Sheet
        1. Understanding How Owner Equity Varies among Business Entities
          1. Sole proprietorship
          2. Partnership
          3. Corporation
        2. Distinguishing between Two Types of Capital Stock
          1. Preferred stock
          2. Common stock
          3. Recording stock transactions on the balance sheet
        3. Defining Paid-In Capital
        4. Recording Retained Earnings
        5. Spotting Reductions to Stockholders’ Equity
          1. Paying dividends
          2. Buying back shares: Treasury stock
        6. Exploring Stock Splits
        7. Computing Earnings per Share
          1. Simple capital structure
          2. Complex capital structure
      6. Chapter 6: Coupling the Income Statement and Balance Sheet
        1. Rejoining the Income Statement and Balance Sheet
          1. Seeing connections between accounts
          2. Using transactions to explain the connections
        2. Introducing Operating Ratios
          1. Comparing expected with actual operating ratios
          2. Generating balance sheet amounts by using ratios
        3. Adding Fixed Assets, Depreciation, and Owners’ Equity
          1. Dealing with fixed assets and depreciation
          2. Tacking on owners’ equity
        4. Completing the Balance Sheet with Debt
          1. Going over the debt section of the balance sheet
          2. Tying in the new equity section
    6. Book V: Reporting on Your Financial Statements
      1. Chapter 1: Presenting Financial Condition and Business Valuation
        1. Clarifying the Values of Assets in Balance Sheets
          1. Considering options for balance sheet valuation
          2. Comparing two balance sheet valuations
        2. Introducing Business Valuation
          1. Grasping the practical applications of business valuations
          2. Considering a CVA designation
        3. Comparing Business Valuation Methods
          1. Replacing assets: Replacement value
          2. Using future earnings and cash flow
      2. Chapter 2: Laying Out Cash Flows and Changes in Equity
        1. Understanding the Difference between Cash and Profit
          1. Seeing how noncash transactions affect profit
          2. Distinguishing costs from expenses
        2. Realizing the Purpose of the Statement of Cash Flows
        3. Walking through the Cash Flow Sections
          1. Figuring cash operating results
          2. Showing cash investing transactions
          3. Accounting for financing activities
        4. Recognizing Methods for Preparing the Statement of Cash Flows
          1. Using the direct method
          2. Starting indirectly with net income
        5. Interpreting the Statement of Cash Flows
        6. Looking Quickly at the Statement of Changes in Stockholders Equity
      3. Chapter 3: Analyzing Financial Statements
        1. Judging Solvency and Liquidity
          1. Understanding the risks of late payments
          2. Recognizing current assets and liabilities
          3. Brushing up on current and quick ratios
        2. Understanding That Transactions Drive the Balance Sheet
          1. Analyzing three types of balance sheet transactions
          2. Reviewing changes in balance sheet accounts
        3. Measuring Profitability
          1. Understanding trend analysis
          2. Focusing on return on investment
          3. Homing in on return on equity
        4. Exploring Activity Measures
          1. Accounts receivable turnover
          2. Inventory turnover
        5. Comparing Horizontal and Vertical Analysis
          1. Using horizontal analysis
          2. Implementing vertical analysis
        6. Using Common Size Financial Statements
      4. Chapter 4: Reading Explanatory Notes and Disclosures
        1. Realizing How Corporations Should Govern Themselves
        2. Identifying Corporate Characteristics
        3. Reviewing Common Explanatory Notes
          1. Leveling the playing field among financial statements
          2. Explaining significant accounting policies
          3. Looking for important event disclosures
        4. Putting the Onus on the Preparer
      5. Chapter 5: Studying the Report to the Shareholders
        1. Why Private and Public Companies Treat Annual Reports Differently
        2. Fulfilling Three Purposes
          1. Serving a marketing and PR function
          2. Stating financial performance and goals
          3. Meeting regulatory requirements
        3. Reading the Annual Report to Shareholders
          1. Meeting the chair of the board of directors
          2. Highlighting key financial data
          3. Touting company achievements
          4. Looking into the future
          5. Getting to know key management and board members
        4. Walking through Form 10-K
          1. Facing page: Identifying the affected company
          2. Part I: Finding out more about the registrant
          3. Part II: Revealing the company's financial performance
          4. Part III: Identifying management and corporate governance
          5. Part IV: Exhibits, financial statement schedules, and signature
    7. Book VI: Planning and Budgeting for Your Business
      1. Chapter 1: Incorporating Your Business
        1. Securing Capital: Starting with Owners
          1. Contrasting two sources of equity
          2. Leveraging equity capital with debt
        2. Recognizing the Legal Roots of Business Entities
        3. Incorporating a Business
          1. Issuing stock shares
          2. Offering different classes of stock shares
          3. Determining market value of stock shares
          4. Keeping alert for dilution of share value
          5. Recognizing conflicts between stockholders and managers
      2. Chapter 2: Choosing a Legal Structure for a Business
        1. Differentiating between Partnerships and Limited Liability Companies
          1. Partnerships
          2. Limited liability company (LLC)
          3. Limiting liability: Professional corporations and LLPs
          4. Understanding how partnerships and LLCs distribute profits
        2. Going It Alone: Sole Proprietorships
          1. Describing a sole proprietorship
          2. Understanding liability and financial reporting
        3. Choosing the Right Legal Structure for Income Tax
          1. C corporations
          2. S corporations
        4. Partnerships and LLCs
        5. Summing up the legal structure issue
      3. Chapter 3: Drawing Up a Business Plan to Secure Cash
        1. Outlining the Basic Business Plan
          1. The executive summary
          2. The market assessment
          3. The operational overview
          4. The financial summary: Performance and required capital
        2. Developing a Business Plan
          1. Recognizing the evolution of business plans: BOTE, WAG, and SWAG
          2. Getting the process going
          3. Analyzing and streamlining information with SWOT and KISS
        3. Incorporating Third-Party Information into Your Plan
          1. Gathering the info
          2. Riding the CART concept: Complete, accurate, reliable, and timely
      4. Chapter 4: Budgeting for a Better Bottom Line
        1. Brushing Up on Budgeting Basics
          1. Meeting the master budget
          2. Understanding key budgeting concepts
          3. Planning strategically
        2. Recognizing Factors That Impact Your Budgeting Process
          1. Experience counts
          2. Timing is everything
          3. People get you headed in the right direction
          4. Sales projections pay off
        3. The Nuts and Bolts of Budgeting
          1. Understanding the budgeting financials
          2. Reviewing revenue and production budgets
      5. Chapter 5: Mastering and Flexing Your Budgeting
        1. Budgeting with Cash or Accrual Accounting
          1. Cash basis accounting: Using your checkbook to budget
          2. I accrue, you accrue, we all accrue with accrual accounting
        2. Budgeting to Produce the Income Statement and Balance Sheet
          1. The well-balanced balance sheet
          2. The incredible income statement
        3. Flexing Your Budget: When Plans Change
          1. Controlling your business
          2. Dealing with budget variances
          3. Implementing a flexible budget
      6. Chapter 6: Planning for Long-Term Obligations
        1. Managing Long-Term Debt
          1. The many faces of notes payable
          2. Treasury bonds defined
          3. The dark side of debt-free
        2. Accounting for Bonds
          1. Valuing bonds payable
          2. Figuring out the present value of a bond
          3. Issuing at face value
    8. Book VII: Making Savvy Business Decisions
      1. Chapter 1: Estimating Costs with Job Costing
        1. Understanding How Job Costing Works
          1. Cost objects: The sponges that absorb money
          2. Charging customers for direct and indirect costs
          3. Implementing job costing in manufacturing: An example
        2. Taking a Closer Look at Indirect Costs by Using Normal Costing
          1. Budgeting for indirect costs
          2. Following a normal job costing system
        3. Following the Flow of Costs through a Manufacturing System
          1. Control starts with control accounts
          2. Walking through a manufacturing cost example
          3. Applying the methodology to other control accounts
      2. Chapter 2: Performing Activity-Based Costing
        1. Avoiding the Slippery Slope of Peanut Butter Costing
          1. Recognizing a single indirectcost allocation
          2. A fly in the peanut butter: Dealing with different levels of client activity
          3. Undercosting and overcosting
        2. Designing an Activity-Based Costing System
          1. Refining your approach
          2. Grouping costs by using a cost hierarchy
          3. Testing your ABC design
        3. Using Activity-Based Costing to Compute Total Cost, Profit, and Sale Price
          1. Allocating indirect costs evenly by product
          2. Analyzing and reallocating cost activities
          3. Changing allocations to cost pools
          4. Changing prices after ABC
      3. Chapter 3: Examining Contribution Margin
        1. Computing Contribution Margin
          1. Figuring total contribution margin
          2. Calculating contribution margin per unit
          3. Working out contribution margin ratio
        2. Preparing a Cost-Volume-Profit Analysis
          1. Drafting a cost-volume-profit graph
          2. Trying out the total contribution margin formula
          3. Practicing the contribution margin per unit formula
          4. Eyeing the contribution margin ratio formula
        3. Generating a Break-Even Analysis
          1. Plotting the break-even point
          2. Using the formula approach
        4. Shooting for Target Profit
        5. Observing Margin of Safety
          1. Using a graph to depict margin of safety
          2. Calculating the margin of safety
        6. Taking Advantage of Operating Leverage
          1. Graphing operating leverage
          2. Looking at the operating leverage formula
      4. Chapter 4: Accounting for Change with Variance Analysis
        1. Setting Up Standard Costs
          1. Establishing direct materials standards
          2. Determining direct labor standards
          3. Calculating the overhead rate
          4. Adding up standard cost per unit
        2. Understanding Variances
          1. Computing direct materials variances
          2. Calculating direct labor variances
          3. Computing overhead variances
          4. Looking past the favorable/unfavorable label
        3. Teasing Out Variances
          1. Interpreting variances in action
          2. Focusing on the big numbers
          3. Tracing little numbers back to big problems
      5. Chapter 5: Making Smart Pricing Decisions
        1. Differentiating Products
        2. Taking All Costs into Account with Absorption Costing
        3. Pricing at Cost-Plus
          1. Computing fixed markups
          2. Setting a cost-plus percentage
          3. Considering problems with cost-plus pricing
        4. Extreme Accounting: Trying Variable-Cost Pricing
          1. Working out variable-cost pricing
          2. Spotting the hazards of variable-cost pricing
        5. Bull's-Eye: Hitting Your Target Cost
          1. Calculating your target cost
    9. Book VIII: Handling Cash and Making Purchase Decisions
      1. Chapter 1: Identifying Costs and Matching Costs with Revenue
        1. Defining Costs and Expenses in the Business World
        2. Satisfying the Matching Principle
        3. Identifying Product and Period Costs
        4. Discovering Which Costs Are Depreciated
          1. Handling real property depreciation
          2. Allocating costs between land and buildings
          3. Expensing repairs and maintenance
        5. Preparing a Depreciation Schedule
        6. Deciding When to Recognize Revenue
          1. Going over the revenue recognition principle
          2. Recognizing revenue and cash flow
      2. Chapter 2: Exploring Inventory Cost Flow Assumptions
        1. Discovering How Inventory Valuation Affects the Financial Statements
          1. Comparing merchandising and manufacturing companies
          2. Connecting inventory to revenue
        2. Logging Inventory for Service Companies
        3. Classifying Inventory Types
          1. Accounting for merchandising company inventory
          2. Accounting for manufacturing company inventory
        4. Getting to Know Inventory Valuation Methods
          1. Understanding guidelines used for all methods
          2. Specific identification
          3. Weighted average
          4. First-in, first-out (FIFO)
          5. Last-in, first-out (LIFO)
          6. Comparing inventory cost-flow assumptions
        5. Preparing an Inventory Worksheet
      3. Chapter 3: Answering the Question: Should I Buy That?
        1. Identifying Incremental and Opportunity Costs
        2. Keeping It Simple: The Cash Payback Method
          1. Using the cash payback method with equal annual net cash flows
          2. Applying the cash payback method when annual net cash flows change each year
        3. It's All in the Timing: The Net Present Value (NPV) Method
          1. Calculating time value of money with one payment for one year
          2. Finding time value of money with one payment held for two periods or more
          3. Calculating NPV with a series of future cash flows
        4. Measuring Internal Rate of Return (IRR)
        5. Considering Qualitative Factors
      4. Chapter 4: Knowing When to Use Debt to Finance Your Business
        1. Understanding the Basics of Debt Capital
          1. Debt maturity
          2. Debt security
          3. Other debt attributes
        2. Determining When Debt Is Most Appropriate
          1. When you can offer security or collateral
          2. When business is stable
          3. When you have financial strength
        3. Using Loans, Leases, and Other Sources of Debt
          1. Borrowing from banks
          2. Making friends with asset-based lenders
          3. Leasing as a source of capital
          4. Tapping government programs and the SBA
          5. Using other sources of debt-based capital
        4. Getting Creative with Capital
          1. Generating internal cash flow
          2. Leveraging unsecured creditors
          3. Going after government aid, gifts, and grants
          4. Partnering up
      5. Chapter 5: Interpreting Your Financial Results as a Manager
        1. Gauging the Relative Importance of Information
        2. Reviewing Profit and Earnings
          1. Judging profit performance
          2. Testing earnings per share (EPS) against change in bottom line
        3. Judging the Company's Cash Position
        4. Tackling Extraordinary Gains and Losses
        5. Recognizing the Risks of Restatement
        6. Remembering the Limits of Financial Reports
    10. Book IX: Auditing and Detecting Financial Fraud
      1. Chapter 1: Mulling Over Sarbanes-Oxley Regulation
        1. Pre-SOX Securities Laws
          1. The Securities Act of 1933: Arming investors with information
          2. The Securities Exchange Act of 1934: Establishing the SEC
          3. Other securities laws
        2. The Scope of SOX: Securities and Issuers
          1. Determining what a security is
          2. Defining an issuer
          3. Figuring out how stock exchanges work
          4. Unveiling the SOX surprise
        3. The Post-SOX Paper Trail
          1. Form 10-K
          2. Form 10-Q
          3. Form 8-K
      2. Chapter 2: Preventing Cash Losses from Embezzlement and Fraud
        1. Setting the Stage for Protection
          1. Preventing loss with internal controls
          2. Recognizing the dual purpose of internal accounting controls
          3. Struggling with fraud committed by the business
        2. Putting Internal Controls to Work
          1. Going down the internal controls checklist
          2. Considering some important details of internal control
        3. Recognizing Limitations of Internal Controls
          1. Keeping internal controls under control
          2. Finding fraud that slips through the net
      3. Chapter 3: Assessing Audit Risk
        1. Using the Audit Risk Model
          1. Listing the financial statements
          2. Introducing audit risk
          3. Inherent risk: Recognizing the nature of a client's business
          4. Control risk: Assessing a client's ability to detect and correct problems
          5. Detection risk: Figuring out your chances of overlooking inaccuracies
        2. Following Risk Assessment Procedures
          1. Recognizing the nature of the company
          2. Examining the quality of company management
          3. Asking employees for information
          4. Analyzing processes and paperwork
          5. Observing the client at work
        3. Figuring Out What's Material and What Isn't
          1. Distinguishing errors from fraud
          2. Explaining the triangle of fraud
        4. Evaluating Your Audit Risk Results
          1. Tailoring the audit to a low-risk situation
          2. Responding to a high-risk assessment
          3. Documenting audit risk results
      4. Chapter 4: Collecting and Documenting Audit Evidence
        1. Management Assertions: Assessing the Information a Client Gives You
          1. Defining financial statement presentation and disclosure
          2. Monitoring classes of transactions
          3. Analyzing account balances
        2. Eyeing the Four Concepts of Audit Evidence
          1. The nature of the audit evidence
          2. The competence of the audit evidence
          3. The sufficiency of the audit evidence
          4. The evaluation of the audit evidence
        3. Applying Professional Judgment
          1. Exercising skepticism
          2. Brainstorming with audit team members
        4. Using Your Audit Program to Request the Right Evidence
        5. Documenting the Audit Evidence
          1. Types of documentation
        6. Ownership and retention of the audit documentation
      5. Chapter 5: Auditing a Client's Internal Controls
        1. Defining Internal Controls
        2. Identifying the Five Components of Internal Controls
        3. Determining When You Need to Audit Internal Controls
          1. Defining substantive strategy and control testing strategy
          2. Figuring out which strategy is best
        4. Testing a Client's Reliability: Assessing Internal Control Procedures
          1. Considering external factors
          2. Evaluating how management assesses its controls
          3. Using questionnaires to evaluate internal controls
          4. Designing your tests of controls
          5. Using sampling to test internal controls
          6. Knowing when internal controls are sound or flawed
          7. Documenting your conclusion
        5. Limiting Audit Procedures When Controls Are Strong
        6. Tailoring Tests to Internal Control Weaknesses
        7. Timing a Client's Control Procedures
          1. Setting a timeline for the client
          2. Conducting interim versus year-end audits
      6. Chapter 6: Getting to Know the Most Common Fraud Schemes
        1. Frauds Committed by Businesses
          1. Preying on vulnerable populations
          2. Picking investors’ pockets
          3. Doing business with bribes
          4. Laundering money
          5. Perpetrating construction fraud
          6. Dealing in subprime and predatory lending
          7. Taking advantage of employees
        2. Frauds Committed against Businesses
          1. Employee theft
          2. Vendor and customer fraud
          3. Insurance fraud
          4. Real estate and mortgage fraud
        3. Bilking the Government
          1. Tax fraud
          2. Contract fraud
          3. Medicare and Medicaid fraud
          4. Social Security fraud
        4. Introducing the Ponzi Scheme
      7. Chapter 7: Cooked Books: Finding Financial Statement Fraud
        1. Exploring the Financial Statement Fraud Triangle
          1. Understanding the incentive behind financial statement fraud
          2. Seeing the fraud opportunity
          3. Coming up with a rationalization for the fraud
        2. Spotting the Common Methods of Fraud
          1. Hidden liabilities
          2. Cookie jar reserves
          3. Off–balance sheet transactions
          4. Notes no one can comprehend
        3. Uncovering Financial Statement Fraud
          1. Comparative techniques
          2. Ratio analysis
          3. Beneish model
          4. Data mining
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