[...]... basics in real-time accounting It accounting provides the information you need to run your business, and it begins with day-to-day record keeping Gathering this information on the “gozinta” and “gozouta” forms the basis for many of your managerial decisions These numbers can be sliced and diced many ways to help you do your job We’ll cover management accounting in Chapters 5, 6, and 7 Accounting from the... business Accounting can become quite complex It has a high MEGO factor MEGO stands for that state of mental saturation when “My Eyes Glaze Over” in stupefaction An exasperated student was once overheard complaining, “Who ever thought addition and subtraction could be this hard?” 1 Copyright 2003 by The McGraw-Hill Companies, Inc Click Here for Terms of Use 2 Accounting for Managers In the Beginning Accounting. .. credited, and the memo are also recorded 14 Accounting for Managers Before we overload you with more accounting terminology, let’s use the example of our new service business to show how all this works As a result of the three transactions we’ve entered, here are the ledgers for five accounts: Income: Consulting Services Debit Credit Notes 6/2 $1000 Invoice for consulting services $1,000 Total Assets:... check for several items This requires a more complex entry: our accounts still balance, but they are spread out over several transactions, not just two We’ll illustrate this with a general journal entry for a check that was written to an office supply store Let’s say we bought a 22 Accounting for Managers printer, ink cartridges, and supplies for the annual Christmas party The PR column stands for posting... example used accrual Accrual basis An accounting You can recaccounting method that tracks income when you ognize accrual accounting send an invoice, even before you because you see an asset receive payment, and tracks expenses category called accounts when an invoice comes in, even receivable and you see before you pay it short-term liabilities for Cash basis An accounting method bills you need to pay... sophisticated computer systems and highly specialized accounting standards we use today Double Entry The first principle of accounting we need to understand is called double-entry bookkeeping Each transaction made in the accounting system is entered twice No, this Financial statements A does not mean we are set of accounting docukeeping two sets of books ments prepared for a busiWe enter every transaction ness... synonym for income, so ments are the income and this can also be called a statement of expense statement and the revenue balance sheet Balance sheet A financial statement If you’re using a comthat shows the financial position—that puterized accounting pack- is, the assets, liabilities, and value—of a company on a particular day age, you simply go to the 12 Accounting for Managers Automagic Accounting. .. see how accounting of all the accounts in the accounting system Some of moves from the recording them may be used every day, such as of each transaction to the Cash, and some rarely or even never presentation of useful reports Bookkeeping and Accounting Many people confuse bookkeeping and accounting They think that bookkeeping is accounting Bookkeeping is the act of recording transactions in the accounting. .. understanding of several key accounting concepts For this reason, only the most concentrated examples are included here After finishing this book and working in your job for a while, you may decide to take some accounting courses to practice with detailed examples of the many problems you find in accounting That’s a good idea, particularly as you rise to greater responsibility For now, my expectation is... As you 6 Accounting for Managers move up in complexity, the plumbing in a 1000-square-foot house with one bathroom and one kitchen is simpler than in a mansion with a dozen bathrooms and several kitchens You want an accounting system that meets your needs The information an accounting system provides has two faces—external and internal To provide these two different views, your accounting system divides . James S. Pepitone Six Sigma for Managers by Greg Brue Design for Six Sigma by Greg Brue and Robert G. Launsby Leadership Skills for Managers by Marlene Caroselli Negotiating. Checklist for Chapter 4 82 5. Management Accounting 83 Management Accounting for the Future 84 Cost/Volume/Profit Analysis 89 Manager’s Checklist for Chapter