Contents

Preface

Abbreviations

List of tables

List of figures

How to use this book

Part I: Financial statements according to German GAAP

1Introduction to accounting

1.1Purpose of accounting

1.1.1The fundamental question and the fundamental equation

1.1.2Financial and managerial accounting

1.1.3Content of accounting/basic terms

1.2Elements of financial statements

1.2.1Balance sheet

1.2.2Income statement and changes-in-equity statement

1.2.3Cash flow statement

1.2.4Notes and management report

1.3Accounting procedures

1.3.1Accounts, debiting, crediting

1.3.2Journalizing and posting

1.3.3Opening and closing of accounts

1.3.4Specific topics of double-entry accounting

1.3.4.1Taxes

1.3.4.2Received price reductions

1.3.4.3Granted price reductions

2Introduction to German accounting

2.1Legal framework

2.1.1Legal regulations

2.1.2Applicability and simplifications

2.1.2.1Applicability of Commercial Code depending on legal form

2.1.2.2Applicability of Commercial Code depending on size class

2.1.3Consequences of legal form and size classes

2.1.4Consolidated financial statements

2.2Reporting conception

2.3Generally Accepted Accounting Principles

2.3.1Overview

2.3.2Principles of documentation

2.3.3Principles of accounting

2.3.3.1General principles

2.3.3.2Recognition principles

2.3.3.3Measurement principles

2.4Balance sheet: general recognition rules

2.4.1Recognition of assets

2.4.2Initial measurement of assets

2.4.2.1Acquisition costs

2.4.2.2Production costs

2.4.3Recognition of liabilities

2.4.4Measurement of liabilities

2.5Stock taking/inventory

2.6Definition of income and expense

3Financial statements according to Commercial Code

3.1Balance sheet

3.1.1Structure

3.1.2Recognition prohibitions

3.1.3Non-current assets

3.1.3.1Classification non-current–current

3.1.3.2Subsequent measurement

3.1.3.3Presentation

3.1.3.4Intangible assets

3.1.3.5Tangible assets

3.1.3.6Financial assets

3.1.4Excursus: accounting for financial instruments according to IFRS

3.1.5Current assets

3.1.5.1Inventories

3.1.5.2Accounts receivable

3.1.5.3Securities and cash/cash equivalents

3.1.6Equity

3.1.6.1Subscribed capital and capital reserves

3.1.6.2Revenue reserves and retained earnings

3.1.7Provisions

3.1.7.1Accounting for provisions

3.1.7.2Specifics for pension provisions

3.1.8Debt/payables

3.1.9Contingent liabilities

3.1.10Specific topics

3.1.10.1Deferrals and accruals

3.1.10.2Deferred taxes

3.1.10.3Hedge accounting

3.1.10.4Accounting for leases

3.2Income statement

3.3Notes

3.3.1Overview

3.3.2General information (§ 284)

3.3.3Additional information about balance sheet and income statement

3.3.4Additional information not related to balance sheet or income statement

3.4Cash flow statement

3.4.1Purpose and methods

3.4.2Structure of cash flow statement

3.5Management report

3.5.1Purpose and principles

3.5.2Structure and content

3.5.3Upcoming extended CSR reporting

4Consolidated financial statements

4.1Purpose

4.2Legal requirements

4.2.1Mandatory preparation

4.2.2Applicable rules

4.3Elements and content

4.4General principles

4.5Consolidation scope

4.6Consolidation procedures

4.6.1Full consolidation

4.6.1.1Comparability of data

4.6.1.2Currency conversion

4.6.1.3Capital consolidation

4.6.1.4Liability consolidation

4.6.1.5Consolidation of intercompany profits

4.6.1.6Income consolidation

4.6.1.7Deferred taxes on consolidation procedures

4.6.2Proportional consolidation

4.6.3Associated companies/at-equity consolidation

4.7Consolidated notes

Part II: Exercises

5Exercises on individual topics with solutions

5.1Bookkeeping and basic terms

5.2Exercises on fundamental concepts and GAAP

5.3Exercises on non-current assets

5.4Exercises on current assets

5.5Exercises on equity

5.6Exercises on provisions

5.7Exercises on debt

5.8Exercises on deferred items and deferred taxes

5.9Exercises on income statement and cash flow statement

6Case studies

7Solutions for case studies

Additional information

8Glossary

9Vocabulary

Literature

Index

About the author

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