Basic Accounting to Understand Financial Statements

This book is primarily for MBA students with little or no background in accounting who are about to take their required core course in financial accounting. This book can also be useful as a review for both graduate and undergraduate students before taking more advanced accounting courses, and indeed, for anyone who wants to learn more about accounting to better understand financial statements. Throughout, the explanations are as intuitive as possible and supported by simple examples.



Part I presents the concepts of accounting, focusing on the balance sheet and income statement and the timing of revenue and expense recognition. Part II applies those concepts to the financial statements of an actual company, Starbucks. Part III provides an overview of bookkeeping, including debits and credits, T-accounts, and a comprehensive example. Part IV briefly reviews academic research that provides evidence on the usefulness of accounting information.