Table of Contents

Chapter 1 - The Controller Job Description. 8

The Controller Job Description. 8

The Chief Financial Officer Job Description. 9

The New Controller Checklist 11

Chapter 2 - Cash Management 16

Overview of the Bank Reconciliation. 16

The Bank Reconciliation Procedure. 17

Bank Reconciliation Problems. 18

The Bank Reconciliation Statement 18

Accounting for Petty Cash. 19

The Cash Forecast 20

Cash Investments. 23

Negative Cash on the Balance Sheet 24

Cash Controls. 24

Cash Record Keeping. 25

Chapter 3 - Credit and Collections Management 27

Receivables Measurement 27

Credit Management 29

Credit Terms and the Cost of Credit 31

Collections Management 33

Other Cash Acceleration Techniques. 34

The Allowance for Doubtful Accounts. 35

The Direct Write-off Method. 38

Credit and Collection Controls. 38

Chapter 4 - Billing Management 41

Billing Management 41

Structure of the Invoice. 43

Accounting for Billings. 44

Accrued Revenue. 46

Accounting for Sales Taxes. 47

Sales Tax Exemption Certificates. 48

Sales Tax Audits. 49

Errors in Compliance. 50

Audit Best Practices. 50

Planning Topics. 50

Prevention Topics. 51

Billing Controls. 52

Chapter 5 - Inventory Management 54

The Periodic Inventory System.. 54

The Perpetual Inventory System.. 55

How to Set Up Inventory Record Keeping. 56

Cycle Counting. 57

Inventory Reconciliation. 58

The Physical Inventory Count 59

Inventory Costing. 60

The First In, First Out Method. 60

The Last In, First Out Method. 61

The Weighted Average Method. 63

Standard Costing. 64

The Retail Inventory Method. 65

Accounting for Obsolete Inventory. 66

Chapter 6 - Fixed Assets Management 70

Fixed Asset Tracking. 70

Tag Tracking. 70

Bar Code Tracking. 71

RFID Tracking – Active Transmission. 71

RFID Tracking – Passive Transmission. 72

Accounting for Fixed Assets. 72

Fixed Asset Controls. 74

Controls for Fixed Asset Acquisition. 74

Controls for Fixed Asset Theft 75

Controls for Fixed Asset Disposal 75

Fixed Asset Record Keeping. 76

Audit Requirements. 77

Chapter 7 - Accounts Payable Management 80

Accounts Payable Management 80

Three-Way Matching. 82

Use Taxes. 83

Accounting for Accounts Payable. 84

Accounts Payable Controls. 85

Accounts Payable Record Keeping. 86

Chapter 8 - Equity Management 89

Accounting for Stock. 89

The Sale of Stock for Cash. 89

Stock Issued in Exchange for Non-Cash Assets or Services. 90

The Repurchase of Stock (Treasury Stock) 90

Accounting for Dividends. 91

Chapter 9 - Payroll Management 96

Payroll Cycle Duration. 96

Streamlined Timekeeping. 98

Timekeeping Systems. 99

Computerized Time Clocks. 99

Internet-Based Time Tracking. 101

Electronic Payments. 102

Payments by Direct Deposit 102

Payments by Pay Card. 103

Employee Self-Service. 104

Manager Self-Service. 104

Transaction Error Analysis. 104

Staff Training Program.. 105

The Payroll Calendar. 106

Information Confidentiality. 107

Accounting for Payroll 107

Primary Payroll Journal Entry. 107

Accrued Wages. 109

Accrued Bonuses. 109

Accrued Commissions. 110

Manual Paycheck Entry. 111

Employee Advances. 112

Accrued Vacation Pay. 113

Payroll Controls. 114

General Controls. 114

Payroll Calculation Controls. 115

Check Payment Controls. 115

Direct Deposit Controls. 116

Self-Service Controls. 116

Garnishment Controls. 117

Employee Advances Controls. 117

Chapter 10 - Department Management 120

Schedule of Activities. 120

Error Tracking System.. 120

Process Reviews. 123

Queue Management 123

Department Layout 124

Skills Review and Training. 125

Consolidate Accounting. 126

Chapter 11 - Closing the Books. 129

Prior Steps: Update Reserves. 129

Core Steps: Issue Customer Invoices. 130

Core Steps: Value Inventory. 132

Core Steps: Calculate Depreciation. 134

Core Steps: Create Accruals. 136

Core Steps: Consolidate Division Results. 137

Core Steps: Eliminate Intercompany Transactions. 137

Core Steps: Review Journal Entries. 138

Core Steps: Reconcile Accounts. 138

Core Steps: Close Subsidiary Ledgers. 140

Core Steps: Create Financial Statements. 140

Core Steps: Review Financial Statements. 140

Core Steps: Accrue Tax Liabilities. 141

Core Steps: Close the Month. 141

Core Steps: Add Disclosures. 141

Core Steps: Write Cover Letter. 142

Core Steps: Issue Financial Statements. 143

Delayed Steps: Issue Customer Invoices. 143

Delayed Steps: Closing Metrics. 143

Delayed Steps: Document Future Closing Changes. 144

Delayed Steps: Update Closing Procedures. 144

Soft Close. 145

Chapter 12 - The Financial Statements. 149

The Income Statement 149

Income Statement Overview.. 149

The Single-Step Income Statement 152

The Multi-Step Income Statement 153

The Condensed Income Statement 153

The Contribution Margin Income Statement 154

The Multi-Period Income Statement 155

How to Construct the Income Statement 156

The Balance Sheet 157

Overview of the Balance Sheet 158

The Common Size Balance Sheet 161

The Comparative Balance Sheet 162

How to Construct the Balance Sheet 163

The Statement of Cash Flows. 165

Overview of the Statement of Cash Flows. 166

The Direct Method. 166

The Indirect Method. 168

How to Prepare the Statement of Cash Flows. 170

The Statement of Retained Earnings. 172

Overview of the Statement of Retained Earnings. 172

How to Prepare the Statement of Retained Earnings. 173

Chapter 13 - Public Company Financial Reporting. 176

Interim Reporting. 176

The Integral View.. 176

The Discrete View.. 177

Comparison of the Integral and Discrete Views. 178

Interim Reporting Issues. 178

Segment Reporting. 178

Primary Segment Reporting Issues. 179

The Segment Report 180

Earnings per Share. 181

Basic Earnings per Share. 181

Diluted Earnings per Share. 183

Presentation of Earnings per Share. 186

The Public Company Closing Process. 186

The Form 10-Q.. 188

The Form 10-K.. 189

The Form 8-K.. 191

The Disclosure of Non-GAAP Information. 194

Chapter 14 - Management Reports. 198

The Duration of a Report 198

Responsibility Reporting. 198

The Flash Report 199

Expense Reporting. 201

Margin Reporting. 202

Variance Reporting. 205

The Purchase Price Variance. 206

Material Yield Variance. 206

Labor Rate Variance. 207

Labor Efficiency Variance. 208

Variable Overhead Spending Variance. 209

Variable Overhead Efficiency Variance. 209

Fixed Overhead Spending Variance. 210

Selling Price Variance. 211

Sales Volume Variance. 211

Problems with Variance Analysis. 212

Which Variances to Report 213

How to Report Variances. 214

Chapter 15 – Ratio Analysis. 217

Deflated Sales Growth. 217

Deflated Profit Growth. 218

Core Earnings Ratio. 219

Margin of Safety. 220

Return on Equity. 222

Days Sales Outstanding. 224

Best Possible DSO.. 225

Inventory Turnover Measurements. 226

Sales Productivity. 226

Sales Backlog Ratio. 227

Measurement Consistency. 228

Measurements and the Soft Close. 229

Chapter 16 - Budgeting. 231

The System of Budgets. 231

The Reasons for Budget Iterations. 234

Overview of the Revenue Budget 235

The Ending Finished Goods Inventory Budget 238

The Production Budget 240

Production Budgeting for Multiple Products. 242

The Direct Materials Budget (Roll up Method) 242

The Direct Materials Budget (Historical Method) 244

The Direct Labor Budget 245

The Manufacturing Overhead Budget 246

The Sales and Marketing Budget 247

Diminishing Returns Analysis. 249

The Research and Development Budget 250

The Administration Budget 252

The Compensation Budget 254

The Budgeted Income Statement 257

The Budgeted Balance Sheet 258

Accounts Receivable. 258

Inventory. 260

Fixed Assets. 261

Accounts Payable. 262

Additional Estimation Elements. 263

The Cash Line Item... 263

The Financing Budget 264

The Compiled Balance Sheet 266

Chapter 17 - Capital Budgeting. 269

Overview of Capital Budgeting. 269

Constraint Analysis. 270

Net Present Value Analysis. 271

The Payback Method. 273

Capital Budget Proposal Analysis. 274

The Outsourcing Decision. 275

The Capital Budgeting Application Form.. 276

The Post Installation Review.. 278

The Lease versus Buy Decision. 279

Chapter 18 - Computer System Selection and Installation. 282

Computer System Selection. 282

Requirements Development 282

The Request for Proposals. 284

Bidders Conference. 285

Proposal Evaluation. 285

Demonstrations and Reference Checks. 287

Computer System Installation. 288

Answers to Chapter Questions. 292

Glossary. 326

Index. 331

 

Final Examination………………………………………………………………………………………………….337