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Accounting Made Simple | Top 20 Key Learnings

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One Sentence Overview

“Accounting Made Simple” by Mike Piper is a comprehensive and straightforward guide to the basics of accounting that explains complex accounting concepts in an easy-to-understand manner, making it an ideal resource for beginners, students, and anyone who wants to gain a solid understanding of financial accounting and its applications.

The Five Big Ideas from the Book

  1. Financial statements: The book explains the three main financial statements, which are the balance sheet, the income statement, and the statement of cash flows. These statements provide an overview of a company’s financial status and help users make informed decisions.
  2. The accounting equation: The author introduces the accounting equation, which states that assets equal liabilities plus owner’s equity. This equation serves as the foundation for all of financial accounting and is used to make sure that a company’s books balance.
  3. Double-entry accounting: The book discusses the double-entry accounting system, which is based on the idea that every transaction has two parts. This system helps ensure that transactions are recorded accurately and completely.
  4. Accrual accounting: The author explains accrual accounting, which is the method of recognizing transactions as they occur, rather than when payment is made or received. This helps provide a more accurate picture of a company’s financial status.
  5. The matching principle: The book covers the matching principle, which states that expenses should be matched with the related revenue. This helps provide a more accurate picture of a company’s profitability.

Who is This Book For

“Accounting Made Simple” by Mike Piper is a beginner’s guide to financial accounting. The book is intended for individuals who have little or no prior knowledge of accounting and are looking for a comprehensive introduction to the subject. This includes students, entrepreneurs, small business owners, or anyone who needs to understand the basics of accounting for personal or professional reasons. The book provides a clear and concise explanation of accounting concepts and principles, using simple language and practical examples to make the material accessible to a wide range of readers. The course is designed to help individuals develop a solid understanding of financial accounting and to give them the confidence to tackle more advanced topics in the future.

Key Insights from the Book

  1. The importance of financial statements: Financial statements are essential tools for managing and monitoring the financial performance of a company.
  2. Understanding the accounting equation: The accounting equation serves as the foundation for all of the financial accounting and helps ensure that a company’s books balance.
  3. The basics of double-entry accounting: Double-entry accounting is a system that helps ensure that transactions are recorded accurately and completely.
  4. The principles of accrual accounting: Accrual accounting recognizes transactions as they occur, rather than when payment is made or received, and provides a more accurate picture of a company’s financial status.
  5. The importance of the matching principle: The matching principle ensures that expenses are matched with the related revenue and provides a more accurate picture of a company’s profitability.
  6. Understanding the three main financial statements: The balance sheet, income statement, and statement of cash flows provide an overview of a company’s financial status and help users make informed decisions.
  7. The role of debits and credits in accounting: Debits and credits play an important role in double-entry accounting and are used to record transactions in a manner that ensures that the books balance.
  8. The importance of cash flow management: Proper cash flow management is essential for the financial health of a company.
  9. Understanding the difference between assets, liabilities, and owner’s equity: These are the three components of the accounting equation and provide a snapshot of a company’s financial status.
  10. The use of financial ratios in decision making: Financial ratios provide a quick and easy way to analyze a company’s financial performance and are used to make informed decisions.
  11. The role of accounts receivable and accounts payable in accounting: Accounts receivable and accounts payable are important components of a company’s financial status and affect cash flow management.
  12. The difference between accruals and deferrals: Accruals and deferrals play an important role in accrual accounting and help provide a more accurate picture of a company’s financial status.
  13. Understanding the difference between cash and accrual accounting: Cash accounting is based on payment being made or received, while accrual accounting recognizes transactions as they occur.
  14. The importance of accurate record-keeping: Accurate record-keeping is essential for the financial health of a company and helps ensure that transactions are recorded accurately and completely.
  15. The role of depreciation in accounting: Depreciation is used to allocate the cost of a long-term asset over its useful life and helps provide a more accurate picture of a company’s financial status.
  16. Understanding the difference between capital expenditures and revenue expenditures: Capital expenditures are investments in long-term assets, while revenue expenditures are expenses incurred in the normal course of business.
  17. The importance of internal controls in accounting: Internal controls help ensure that transactions are recorded accurately and completely and provide a layer of security to a company’s financial information.
  18. The role of ethics in accounting: Ethics play an important role in accounting and help ensure that financial information is presented fairly and accurately.
  19. The use of technology in accounting: Technology has revolutionized the accounting industry and provides a more efficient way to manage financial information.
  20. The importance of staying current with accounting standards and regulations: Accounting standards and regulations change over time, and it is important for individuals and companies to stay up-

About the Author

Mike Piper is the author of “Accounting Made Simple.” He is a certified public accountant (CPA) and a personal finance author with over 20 years of experience in the accounting field. He has written several books on personal finance and accounting, including “The Ultimate Guide to Retirement” and “Social Security Made Simple.” In addition to his writing, Mike is also a speaker and educator, working to make complex financial concepts more accessible to the general public.

Mike holds a degree in accounting and finance from the University of Missouri and has worked in both the public and private sectors. He has a passion for helping individuals understand complex financial concepts and has made it his mission to make financial literacy accessible to everyone. Through his writing, speaking, and teaching, Mike has helped countless people develop a deeper understanding of financial accounting and make informed decisions about their finances.

 

 

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