Financial Accounting Fundamentals

[Preface]
This is the second book in the corporate finance series that started with Understanding the B/S and P/L.
This book provides knowledge of financial analysis. The goal is to understand how we can value a company from the data in its financial statements. We expect readers to understand the B/S and P/L formats.
In this book, we will review the concepts rather than detailed procedures. We assume that the readers are "users" of financial statements who won't make statements but will refer to them.
We will explain all the topics as generic matters, though mainly this book follows the U.S. GAAP, the U.S. accounting standards.
If you're not familiar with the B/S and P/L, please read from the first book in the series, Understanding the B/S and P/L.

[Table of Contents]
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Chapter 1: The B/S and P/L
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Balance Sheet (B/S)
Shareholders' equity
Journal entry
Operating cycle
Cost of goods sold (COGS)
Income statement (P/L)
Depreciation
Summary
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Chapter 2: Year-end adjustment in closing entries
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Carry-forward of inventory cost
Appraisal of inventory
Unit cost and quantity
Unit cost
Quantity
Price and quantity variances
Recognition of variances
Prepaid expense and advance paid
Prepaid expense
Advance paid
Current assets and fixed assets
Summary
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Chapter 3: Shareholders' equity and capital transactions
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Issuing common stocks
Retained earnings reserve
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Chapter 4: Allocation of sales and expenses
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Types of depreciation
Impairment and goodwill
Percentage-of-completion method and recognition of income
Tax-effect accounting
Income on the P/L
Product cost, period cost, and COGS
Summary
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Chapter 5: Cash flow statement
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Overview
Cash basis and accrual basis
Cash and its equivalents
Categories of cash flow
Cash flow from operating activities (operating cash flow)
Cash flow from investing activities
Cash flow from financing activities
Cash flow in a company
Cash flow for capital expenditures
The direct method and the indirect method
Free cash flow
NOPLAT
Working capital
Simplified formula
FCF as an operating profitability index
Free cash flow to equity
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Chapter 6: Financial analysis
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Profitability
Safety
Efficiency
CVP analysis
Product portfolio
CVP analysis
CVP formula
Discrepancies between the linear variable cost model and actual product cost
Break-even sales
Break-even point ratio
Margin of safety
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Chapter 7: The present value of future economic profit
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Simple interest and compound interest
Capital cost
Capital asset pricing model (CAPM)
Present value and internal rate of return
An earnings model with perpetuity formula
Valuation of future profits with the discounted cash flow (DCF) method
Acquisition cost and goodwill

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