Accounting For Dummies®, 4th Edition

Part III: Accounting in Managing a Business

In this part . . .

This part of the book, in short, explains how accounting helps managers achieve the financial objectives of the business.

To survive and thrive, a business faces three inescapable financial imperatives: making adequate profit, turning its profit into cash flow on a timely basis, and keeping its financial condition in good shape. Its managers should understand the financial statements of the business (see Part II). In addition, business managers should take advantage of time-tested accounting tools and techniques to help them achieve the financial goals of the business.

To begin this part, Chapter 8 explains that business founders must decide which legal structure to use. Chapter 9 demonstrates that business managers need a well-designed P&L (profit and loss) report for understanding and analyzing profit — one that serves as the touchstone in making decisions regarding sales prices, costs, marketing and procurement strategies, and so on.

Chapter 10 explains that budgeting, whether done on a big-time or a small-scale basis, is a valuable technique for planning and setting financial goals. Lastly, Chapter 11 examines the costs that managers work with day in and day out. Managers may think they understand the cost figures they work with, but they may not appreciate the problems in measuring costs.