As an academic turned entrepreneur, I needed a quick and systematic introduction to accounting concepts. I've bought many books, but so far Piper's has been the clearest of them all. (Not to mention the shortest, another quality that most academic books painfully lack!) Its strength is that it provides clear definitions and explanations that assume no prior knowledge of accounting or finance. One example from page 2: "At its most fundamental level, accounting is the system of tracking the income, expenses, assets and debts of a business." Using these simple but not dumbed-down explanations, the reader quickly develops a good understanding of accounting as a whole. I feel I can now integrate more advanced concepts and methods into this general framework.

The book is divided into two main sections with respectively 6 and 8 chapters.
Part One ["Financial Statements"]:
* introduces the basic accounting equation ("Assets = Liabilities + Owner's Equity");
* defines "retained earnings";
* explains the three types of financial statements that a company needs to produce (Balance Sheet, Income Statement, and Cash Flow Statement);
* teaches you how to use these statements to calculate a company's liquidity (ability to repay debts), profitability, leverage (reliance on debt), and inventory turnover.

Part Two ["General Accepted Accounting Principles (GAAP)"] explains:
* why all public companies have to use the same accounting principles (called GAAP);
* the notions of debit and credit used in bookkeeping;
* the difference between "cash accounting" and "accrual accounting";
* how companies balance their books at the end of each accounting period;
* other GAAP concepts like recording assets at their "historical cost", what transactions are "material" to the company's financial statements, etc.
* depreciation and amortization;
* how companies keep track of their inventory (LIFO method vs. FIFO method) and how they calculate the "Cost of Goods Sold."

If you're not too sure what these concepts mean, this book is probably for you. Each chapter ends with a "Simple Summary" of the chapter's main points. Using these summaries, you can skim the entire book in a few minutes before delving into the chapter of your choice. Whenever Piper mentions a concept he hasn't explained yet, he refers you to the chapter where that concept is explained, so that you never lose thread. And if that's not user-friendly enough, he even offers a refund to readers who are not fully satisfied with the book!

The index, an oft-neglected tool, is very thorough. As such, it is much more useful than the very basic index you find at the end of most finance and accounting books. It will prove invaluable to those who wish to study one particular concept more thoroughly. The notion of "Accounts Payable", for instance, is discussed mainly on pp. 12-14, but it is also mentioned on pages 24, 35, 51, 58, 67, and 83, something you wouldn't know from reading the table of contents or a less well-designed index.

Finally, to make sure you've mastered all the concepts presented in the book, you can head to the author's blog (called "oblivious investor"; full link given in the book) and try to answer the practice questions. You'll be surprised at how quickly you become proficient at calculating a company's "debt to equity ratio" or its "inventory turnover"!

All in all, an excellent little book and a solid stepping stone for learning more complex accounting.

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Rating	4.5 (2386 ratings)
Price	$14.94
Category	Accounting

Accounting Made Simple: Accounting Explained in 100 Pages or Less (Financial Topics in 100 Pages or Less)