A Short Primer on Accounting

1
A Short Primer on Accounting
Jon AshleyCorinne Mahoney Sandy Montgomery
2
Accountancy

• Definition
• Different types of Accounting
• Rules that Govern Accountancy
• Desirable Characteristics of Accounting
  Information

3
Types of Accounting Questions that a Librarian
Might Receive

• Accounting as a Career
• CPA Exam
• Auditing internal and external
• The nature of accounting as a career
• Interpretation of Standards
• Tax questions

4
Accounting Terms
Income Statement (PL)
Net Income
Accounts Payable
Depreciation
Balance Sheet
Accounts Receivable
Assets
Equity
Retained Earnings
Liabilities
Capital

• Glossaries
• Accounting Dictionary-Accounting Glossary of
  Accounting Terms (VentureLine)
  http//www.ventureline.com/glossary.asp
• Accounting Terms and Glossary (Finet Holdings)
  http//www.finet.com.hk/accounting/dictionary.htm
• Blackwell Encyclopedic Dictionary of Accounting
  Available at UNC in print and via NetLibrary as
  an eBook.

5
Accounting Resources

• Accounting Standards
• Handbooks and Dictionaries
• Professional Associations
• Indexes/Databases
• Websites
• Annual Reports

6

• Accounting Standards
• Definition Accounting standards are
  authoritative statements of how particular types
  of transaction and other events should be
  reflected in financial statements. (definition
  from International Accounting Standards Board)
• AKA
• GAAP Generally Accepted Accounting Principles
• What do they look like?
• FASB Statement No. 34
• FAS 142
• APB Opinion No. 30
• SOP 03-4, Reporting Financial Highlights and
  Schedule of Investments by Nonregistered
  Investment Partnerships

7
Organizations that set or regulate standards

• U.S.A.
• AICPAAmerican Institute of Certified Public
  Accountants Issues auditing and other standards
  for the profession http//www.aicpa.org/index.htm
• FASBFinancial Accounting Standards Board Sets
  authoritative accounting standards for the
  private sector http//www.fasb.org/
• International
• IASBInternational Accounting Standards Board
  The leading promulgator of international
  accounting standards. http//www.iasb.org/
• Information on IASB standards and international
  accounting is also available at IAS Plus
  maintained by Deloitte. http//www.iasplus.com/
• Country Specific
• IAS Plus provides a list of authoritative
  resources by country. http//www.iasplus.com/count
  ry/country.htm

8
Standards Print Resources

• FASB Original Pronouncements Accounting Standards
• AICPA Professional Standards
• Miller GAAP Guide (Generally Accepted Accounting
  Principles) Provides a restatement and
  interpretation of the FASB standards.
• Miller GAAS Guide (Generally Accepted Auditing
  Standards) Provides an overview of common
  auditing practice.
• Miller Governmental GAAP Guide Covers government
  accounting.
• Wiley's Interpretation and Application of
  International Accounting Standards IAS
  Provides a summary and interpretation of the
  IASC's international standards.

9
Accounting Handbooks Manuals

• AICPA Audit and Accounting Manual One-volume
  manual that explains and demonstrates useful
  techniques and procedures for conducting
  compilation, review, and audit engagements
• Accountants' Handbook by Carmichael, Lilien, and
  Mellman. Vol. 1 Financial Accounting and General
  Topics Vol. 2 Specialized Industries and
  Special Topics.
• Accounting Trends Techniques annual survey of
  accounting practices from the AICPA

10
Professional Associations

• American Accounting Association (AAA)
  http//aaahq.org/index.cfm
• American Institute of Certified Public
  Accountants (AICPA) http//www.aicpa.org/index.ht
  m
• Institute of Management Accountants (IMA)
  Publishes Statements on Management Accounting
  http//www.imanet.org/ima/index.asp
• National Association of Small Business
  Accountants http//www.smallbizaccountants.com/
• List of Associations available on Rutgers
  University Libraries Accounting Research Guide
  http//www.libraries.rutgers.edu/rul/rr_gateway/re
  search_guides/busi/account.shtmlC

11
Accounting Literature

• Accounting Specific
• Accounting Tax Index (Print) Comprehensive
  list of books, articles, government documents,
  and professional reports about accounting,
  auditing and taxation.
• Accounting Research Network Indexes working
  papers in Accounting.
• Taxation
• CCH Tax Research NetWork
• Federal Tax Code http//assembler.law.cornell.edu
  /uscode/html/uscode26/usc_sup_01_26.html
• General Business Resources with coverage of
  Accounting
• ABI/Inform Global
• Business Industry
• Factiva
• Lexis/Nexis Academic
• Mergent Online

12
Accounting Websites

• Rutgers Accounting Web Excellent portal to
  accounting resources on the Internet
  http//accounting.rutgers.edu/raw/
• CPAnet a resource directory of websites that are
  of interest to the accounting profession. CPAnet
  includes over 800 links to various accounting
  related websites http//www.cpanet.com/
• Tax Links IRS revenue rulings since 1954
  http//www.taxlinks.com/
• AICPA State Link to resources at the state
  level http//www.aicpa.org/states/stmap.htm

13
Company Reports
SEC Filings Forms (EDGAR) All companies,
foreign and domestic, are required to file
registration statements, periodic reports, and
other forms electronically through EDGAR. Anyone
can access and download this information for
free. http//www.sec.gov/edgar.shtml Barrons
Annual Report Service A free service that
provides quick access to annual reports and other
information on select companies.
http//barronsonline.ar.wilink.com/asp/BAR5_search
_ENG.asp
14
Challenges

• The way we use our numbers can have large
  consequences. For example
• Enron Arthur Andersen - WorldCom HealthSouth
  - Tyco - Parmalat Mirant Duke Energy Global
  Crossing - Halliburton Adelphia Lucent
  Technologies Xerox - Shell Oil - Fannie Mae -
  Freddie Mac - Social Security

15
Challenges

• PR problem how can we trust our numbers?
• Independent and trustworthy auditors
• Greater transparency
• More government oversight (?)
• Sarbanes-Oxley recent backlash
• Proactive vs. reactive accounting

16
Challenges

• How to account for derivatives?
• How to measure fair value?
• How to expense stock options?
• How to account for rises and losses in pensions?
• What constitutes real earnings?
• Pressure for non-profits to conform to
  Sarbanes-Oxley standards

17
Relationship to Other TopicsAccounting in some
way influences the following

• Non-Profits
• Government Agencies
• Mergers Acquisitions
• Decision Making