📒 Accounting — Map of Content

Accounting is the language of business. Financial accounting reports to the outside world; managerial accounting guides internal decisions.

Covered at: All programs — typically a core first-year requirement

📄 Financial Accounting (External Reporting)

The three financial statements tell the complete story of a business:

Income Statement — Revenue, expenses, profit
Balance Sheet — Assets, liabilities, equity at a point in time
Cash Flow Statement — Operating, investing, financing activities
Financial Statement Analysis — Ratio analysis and interpretation
Earnings Quality — Accruals, non-cash items, red flags

🔑 Key Financial Ratios

Profitability

Gross Margin = Gross Profit / Revenue
EBITDA Margin = EBITDA / Revenue
Net Margin = Net Income / Revenue
ROE = Net Income / Equity
ROIC = NOPAT / Invested Capital

Liquidity

Current Ratio = Current Assets / Current Liabilities
Quick Ratio = (CA − Inventory) / CL
Cash Ratio = Cash / CL

Leverage

Debt/Equity = Total Debt / Equity
Interest Coverage = EBIT / Interest Expense
Net Debt/EBITDA = Net Debt / EBITDA

Efficiency

Asset Turnover = Revenue / Total Assets
Inventory Turnover = COGS / Avg Inventory
Days Sales Outstanding = AR / (Revenue/365)

🏭 Managerial Accounting (Internal Decision-Making)

Break-Even Analysis — Fixed costs, contribution margin
Cost Behavior — Fixed vs. variable vs. mixed
Activity-Based Costing — ABC methodology
Budgeting and Variance Analysis — Standard costing
Transfer Pricing — Pricing between business units

🏛️ Key Accounting Standards

Standard	Region	Governs
GAAP	USA	US public companies
IFRS	International (150+ countries)	Non-US companies

Key GAAP vs. IFRS differences:

Inventory: GAAP allows LIFO; IFRS prohibits it
R&D: GAAP expenses all; IFRS capitalizes development costs

📚 Essential Books

Financial Accounting — Libby, Libby, Short
The Interpretation of Financial Statements — Benjamin Graham
Financial Shenanigans — Howard Schilit (detecting earnings manipulation)

🏫 School Spotlights

Booth: Financial Accounting is a core; hard-nosed Chicago approach to numbers
Wharton: ACCT 611 — rigorous; strong quant emphasis
HBS: FRC (Financial Reporting & Control) — case-based; emphasis on reading between the lines

📚 Case Studies

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