This is a summary review of Accounting Made Simple containing key details about the book.

What is Accounting Made Simple About?

Accounting Made Simple by Mike Piper provides a straightforward introduction to accounting concepts and principles for non-accountants. (Full Summary…)

Accounting Made Simple Summary Review

“Accounting Made Simple: Accounting Explained in 100 Pages or Less” by Mike Piper offers a concise and accessible exploration of fundamental accounting concepts, making it an ideal resource for both beginners and those seeking a quick refresher. The author, part of the Financial Topics in 100 Pages or Less series, successfully distills complex accounting principles into an easily digestible format.

The book serves as a comprehensive guide to understanding essential aspects of accounting without delving into unnecessary technical jargon. Piper covers key topics such as the Accounting Equation, financial statement interpretation and preparation, various financial ratios, and the underlying principles of Generally Accepted Accounting Principles (GAAP).

One notable strength of the book lies in its approachability for readers with varying levels of familiarity with accounting. The author provides clarity on concepts like journal entries, the cash method versus the accrual method, and inventory management, ensuring that even those with minimal accounting background can grasp the fundamentals.

Piper’s commitment to simplicity is evident in the book’s structure, with a division into two main parts: “Financial Statements” and “General Accepted Accounting Principles (GAAP).” Each section is further broken down into chapters, and the author includes “Simple Summaries” at the end of each chapter, offering a quick recap of the main points.

The inclusion of practical examples and illustrations enhances the learning experience, allowing readers to apply theoretical knowledge to real-world scenarios. This hands-on approach is particularly beneficial for individuals seeking to solidify their understanding of accounting principles.

The book is well-received for its brevity, clarity, and user-friendly structure. However, it’s essential to note that the simplicity, while advantageous for quick learning, may leave some readers wanting more depth, particularly those seeking a thorough understanding of accounting principles.

Essentially, “Accounting Made Simple” by Mike Piper stands out as a valuable resource for individuals looking to gain a foundational understanding of accounting concepts. Its concise yet informative approach, coupled with practical examples, makes it an accessible choice for beginners or those seeking a quick review of essential accounting principles. Whether utilized as a standalone guide or a stepping stone to more advanced texts, this book provides a solid introduction to the world of accounting.

Who is the author of Accounting Made Simple?

Mike Piper is the author of several personal finance books and the popular blog Oblivious Investor.

How long is Accounting Made Simple?

• Print length: 114 pages

What genre is Accounting Made Simple?

Business, Finance, Accounting

What are the main summary points of Accounting Made Simple?

Here are some key summary points from Accounting Made Simple:

• Takeaway 1:An accounting equation measures how healthy your finances are: Assets = Liabilities – Equity. Or, if you want to know your equity, or how much you truly own/have: Assets – Liabilities = Equity
• Takeaway 2:The balance sheet is the complete list of assets, liabilities, and equity and outlines your personal or company’s financial health
• Takeaway 3:An income statement tracks financial performance over time, usually a financial year or quarter, and outlines total income after subtracting total expenses from gross profit.
• Takeaway 4:The cash flow statement records outflow and inflow of cash and differs from an income statement by outlining a company’s financial health in current circumstances, not over a set time period. It combines operating activities, investing activities, and financing activities to check for positive or negative cash flow.
• Takeaway 5:Ratios are used to analyse the above statements. They are a fast way of knowing whether your company or business is running efficiently and is profitable.
• Takeaway 6:Accountants use a double-entry data system to record financial activity. If you were to buy a desk for $200, you would record that as -$200 in your personal bank account. But, accountants would record that as both a debit and a credit – $200+ in assets and – $200 in cash. All of these are recorded in the general ledger, which is used to create financial statements.

What are good quotes from Accounting Made Simple?

“For every transaction, a journal entry must be recorded that includes both a debit and a credit. Debits increase asset accounts and decrease equity and liability accounts. Credits decrease asset accounts and increase equity and liability accounts. Debits increase expense accounts, while credits increase revenue accounts.”

“Accumulated Depreciation is what’s known as a “contra account,” or more specifically, a “contra-asset account.”

“Intangible assets are real, identifiable assets that are not physical objects.”

“time. The trial balance is typically prepared at the end of a period, prior to preparing the primary financial statements. The purpose of the trial balance is to check that debits—in total—are equal to the total amount of credits. If debits do not equal credits, you know that an erroneous journal entry must have been posted. While a trial balance is a helpful check, it’s far from perfect, as there are numerous types of errors that a trial balance doesn’t catch. (For example, a trial balance wouldn’t alert you if the wrong asset account had been debited for a given transaction, as the error wouldn’t throw off the total amount of debits.) Chapter 8 Simple Summary For every transaction, a journal entry must be recorded that includes both a debit and a credit. Debits”

“The goal of GAAP is to ensure that companies’ financial statements are prepared using a consistent set of rules and assumptions so that they can be compared to those of another company in a meaningful way.”

“Prepaid Rent is an asset account. Over the course of the three months, the $4,500 will be eliminated as the expense is recorded. Assets caused by the prepayment of an expense are known, understandably, as “prepaid expense accounts.”

“The benefit of the additional accounting accuracy is far outweighed by the hassle involved in making insignificant depreciation journal entries year after year.”

“Assets = Liabilities + Owners’ Equity”

“The statement of retained earnings acts as a bridge between the income statement and the balance sheet. It takes information from the income statement, and it provides information to the balance sheet.”

“XYZ Consulting takes out a loan with its bank. The loan will not appear on the income statement, as the transaction is neither a revenue item nor an expense item. It is simply an increase of an asset (Cash) and a liability (Notes Payable). However, because it’s a cash inflow, the loan will appear on the cash flow statement.”

“Liquidity ratios are used to determine how easily a company will be able to meet its short-term financial obligations.”

Is Accounting Made Simple worth reading?

The majority of customer reviews on leading review sites are positive. Here’s what some reviewers had to say about the book:

“Very simple book on the basic fundamentals of accountng. Short, easy introduction to the topic that’s easy to digest. It allows to get an overview of the subject and will prime you for anything more in-depth to follow.”

* Key sources: LibraryThing, Amazon, Wikipedia