Update

Thank you all for visiting. I know there has not been a new article published in over a year. But that is going to change very soon. Currently I am working on a few articles. The reason for this long delay in posting new materials is mainly being busy with work and school.

I put a great emphasis on the accuracy of the materials on this website, therefore it make take a little while before articles are posted.

Please contact me, if you have any suggestions or questions.

Thank you,
Aghanori

Dr. & Cr. Trick

It's obvious that memorizing debits and credits is not a simple task, and for students and beginners this could be very difficult. Many confuse debits and credits all the time and whether its during an exam, or during the actual accounting practice it could cost you a lot.

But don't worry there is an easier way to deal with debits and credits. Watch this video carefully and you'll never have trouble dealing with debits and credits.

Types of Accounting

There are two types of accounting:

1. Financial
2. Managerial (cost accounting)

There are differences between financial and managerial accounting, and these differences are as follows:

• Financial accounting is for external purposes and managerial accounting is for internal purposes.
• Financial accounting is governed by GAAP, and managerial accounting does not follow any sets of standards.
• Financial accounting deals with the past, and managerial accounting accounting deals with the future.
• Financial accounting is mainly made up of reports, but managerial accounting is decision making for the company or the firm.

There are of course many other differences as well as similarities between financial and managerial accounting. But the above were the most important differences that exist between the two types of accounting.

Accounting Formulas

The table below contains major accounting formulas used for various computations, such as financial ratios and other measurements. In accounting, these formulas will be used in many instances for identifying certain financial characteristics and ratios of a company.

When reviewing the table please note that:

Measurement stands for what the formula or the ratio is looking for. In other words, it is the name of the formula.

Method stands for the actual formula or the ratio.

Purpose defines why and when the formula or the ratio is used.

You can download the PDF format of this table.

Measurement	Method
Current Ratio
Quick Ratio
Working Capital
Net Cash Provided by Operating Activities	After all adjustments to net income are accounted for, what's left over is the Net Cash Provided by Operating Activities, also known as Operating Cash Flow. This number is not a replacement for net income, but it does provide a great summary of how much cash a company's core business has generated.
Cash Flow from Operations to Current Liabilities
Receivables Turnover Rate
Days to Collect Average Accounts Receivable
Inventory Turnover Rate
Days to Sell the Average Inventory
Operating Cycles
Free Cash Flow	Net Cash from Operating Activities - Cash Used for Investing Activities & Dividends
Debt Ratio
Trend in Net Cash Provided by Operating Activities	Appears in comparative statements of cash flows
Interest Coverage Ratio
Percentage Changes; that is, in nest sales and net income
Gross Profit Rate
Operating Expense Ratio
Operating Income
Net Income as a Percentage of Net Sales
Earnings Per Share
Return on Equity
Return on Assets
Return on Common Stockholders’ Equity
Market Value of Financial Instruments	Quoted in financial press or disclosed in financial statements
Price-earnings Ratio
Dividend Yield
Book Value Per Share

Earnings Per Share

What is Earnings Per Share?
A distilled and important income figure, calculated as net income minus preferred dividends (income available to common stockholders), divided by the weighted average of common shares outstanding (WACSO). Companies must disclose earnings per share on the face of the income statement. In another words earnings per share is nothing but the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Earnings per share indicates the income earned by each share of common stock. Thus, companies report earnings per share only for common stock.

Calculation of Earnings Per Share
The computation of earnings per share for a simple capital structure is different from the computationg of earnings per share for a complex capital structure. In a simple capital structure the computation for earnings per share involves two items (other than net income)—(1) preferred stock dividends and (2) weighted-average number of shares outstanding. On the other hand the computation of earnings per share for a complex capital structure includes both basic and diluted earnings per share. In order to compute the earnings per share of a company, the type of the capital structure of the company must be indicated: whether simple or complex.

Basic Earnings Per Share
The earnings per share for a simple capital structure is basic earnings per share. If the capital structure of the company is simple then the word basic would not be necessary. The calculation of basic earnings per share is simpley stated as:

EPS= (Net Income - Preferred Dividends) ÷ Weighted Average Shares Outstanding

Diluted Earnings Per Share

The earnings per share for a complex capital structure is diluted earnings pe share. Diluted EPS begins with the basic EPS computation, but includes the effect of all potential dilutive common shares outstanding during the period. It is computed as income available to common stockholders divided by weighted average shares outstanding, plus the impact of convertibles, options, warrants, and other dilutive securities. The calculation of diluted earnings per share is simply stated as:

EPS= (Net Income - Preferred Dividends) ÷ Weighted Average Shares Outstanding - Impact of Convertibles - Impact of Options, Warrants, and Other Dilutive Securities

This article may be subject to future modification. Please re-visit in the future for an updated version.

Types of Accounting Certifications

In this article you will find an abstract of all Accounting Certifications. As an accounting major students I come across many professors and people with titles such as CIA, and CFE, CFM and I was always curious as to what they stand for, what they do and most importantly whether I want to get any of them or not. So by reading this article you can get a good insight about accounting certifications and their implications.


CPA (Certified Public Accountant)
Certified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA. Individuals who have passed the Exam but have not either accomplished the required on-the-job experience or have previously met it but in the meantime have lapsed their continuing professional education are, in many states, permitted the designation "CPA Inactive" or an equivalent phrase. In most U.S. states, only CPAs who are licensed are able to provide to the public attestation (including auditing) opinions on financial statements. The exceptions to this rule are Arizona, Kansas, North Carolina and Ohio where, although the "CPA" designation is restricted, the practice of auditing is not.

CMA (Certified Management Accountant)
The Institute of Management Accountants' (IMA ) Certified Management Accountant (CMA) certification is a comprehensive credentialing program that assesses mastery of the management accounting and financial management body of knowledge. Subject matter includes economics, corporate finance, cost management, internal controls, performance measurement, financial reporting, decision analysis, organization management, and strategic planning, with a strong emphasis on ethics. To date, the Institute of Certified Management Accountants (ICMA), the certification division of IMA, has awarded more than 30,000 CMA certificates in the U.S. and internationally.

CFM (Certified Financial Manager)
The CFM designation will be of interest to a broad range of professionals including current CMAs who wish to broaden their certification, personnel within the corporate finance organization (treasury, planning, analysis), finance educators, and students. Three parts of the CMA exam form the basis of the CFM exam, with one part on the latter covering advanced topics in Corporate Financial Management, including financial markets and instruments, risk management, corporate restructuring, financial statement analysis, and investor relations.

CFE (Certified Fraud Examiner)
Certified Fraud Examiner is a designation awarded by the Association of Certified Fraud Examiners (ACFE). The ACFE is a 41,000 member-based global association dedicated to provide anti-fraud education and training. In order to become a Certified Fraud Examiner one must meet the following requirements: Be an Associate Member of the ACFE in good standing. Meet minimum academic and professional requirements. Be of high moral character. Agree to abide by the Bylaws and Code of Professional Ethics of the Association of Certified Fraud Examiners. In today's era of specialization, Certified Fraud Examiners are widely recognized as experts in the anti-fraud field. Career opportunities abound for CFEs, and more are growing. The unfortunate reason is simple... fraud has always been with us, and it has never been more prevalent. (Enron, WorldCom, Tyco, etc.)

CFP (Certified Financial Planner)
The Certified Financial Planner designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards in the United States, Financial Planners Standards Council in Canada and 18 other organizations affiliated with Financial Planning Standards Board (FPSB), the international owner of the CFP mark outside of the United States. To receive authorization to use the designation, the candidate must meet education, examination, experience and ethics requirements, and pay an ongoing certification fee. The information contained herein relates specifically to CFP certification in the United States.

CIA (Certified Internal Auditor)
The Certified Internal Auditor is the primary professional designation offered by The IIA. The CIA designation is a globally recognized certification for internal auditors and is a standard by which individuals may demonstrate their competency and professionalism in the internal audit field. Earning the CIA qualification is intended to demonstrate a professional knowledge of the internal audit profession. CIAs are required to take continuing education courses. Many CIAs today are senior internal audit managers, Vice Presidents, Directors and Chief Audit Executives in top global MNC companies driving internal audit functions in their respective companies. The best thing in acquiring CIA is that it is very much relevant to internal audit profession.

EA (Enrolled Agent)
An Enrolled Agent is a tax professional recognized by the United States federal government to represent taxpayers in dealings with the Internal Revenue Service. The profession has been regulated by Congress since 1884. To become an enrolled agent an applicant must pass the Special Enrollment Examination or present evidence of qualifying experience as an Internal Revenue Service employee. A background check, including a review of the applicant’s tax compliance, is conducted. The right to practice before the Internal Revenue Service is regulated by Federal statute, and persons authorized to practice are known as "Federally Authorized Tax Practitioners," or "FATPs". The FATP status is granted to attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and to persons in a few other categories.

CGFM (Certified Government Financial Manager)
A Certified Government Financial Manager is a professional post-nominal certification issued by the Association of Government Accountants (AGA). It was created in 1994 to provide a professional standard of financial expertise and ethics in government and a standard by which government financial management professionals are measured. Its education, experience and ethics requirements have served to elevate the most seasoned financial professionals. More than 14,000 individuals have received the designation. The certification requires experience, education, and an examination. Candidates must have a minimum of two years experience in government financial functions. Candidates must have a bachelor's degree and complete 24 credit hours of instruction. The examination consists of 3 two-hour tests which must be taken within 3 years of the instruction. A CGFM must complete Continuing Professional Education (CPE) credits to maintain certification.

Introduction to Aghanori

Aghanori.com is Mohammadali Aghanori's accounting web page. I'm currently a junior at Queens College, City University of New York. This website was designed to address many questions and concerns regarding the accounting industry. The sole focus of this website is accounting, and it will often discuss various topics in accounting. I created this website to practice and exercise my knowledge of accounting. As a student who plans to be a teacher in the future, I feel obligated toward other students and myself as well to discuss the most problematic, complex, and sophisticated concepts of accounting.

"An ounce of practice is worth more than tons of preaching." says Mahatma Gandhi, so by practicing the concepts and ideas of accounting, which at points are very confusing one will only get better at. I believe studying accounting for accounting majors should not be limited to classes. One must not be satisfied with the minimum. Extracurricular readings, studying, and researching will be very useful when it comes to preparing for jobs, the CPA exam, and accounting life in general. Currently my goal as an student is not to just get good grades and go from one accounting class to the next. But to learn the material as if I were to apply them on a task for a client. In this day and age the technology makes a great contribution to our success, with all the given tools such as computers, and the world wide web one should not have the excuse of not having enough resources.

Being successful not just as accountants, but as scholars, citizens, and most importantly humans will ultimately depend on one factor and that's our effort. The amount of energy and time we put into our goal measures the percentage of our success, and I intend to use all the resources and tools at my disposal, with all my energy and time to reach that goal and to be a successful accountant. I also plan to give back to the society what I got from my great teachers who taught me beyond accounting. They taught me to be courageous, confident, persistent, consistent, strong and of course professional. I, like them intend to spread those messages, and one day to teach my students that you shouldn't be studying  because you have to, but because you love to. The thirst for learning should only be quenched with education. In light of using today's most advanced technological tools I find writing on the web a great method to reach a great audience from all over the world. As a result I created this web page.

With that introduction, I have to announce that in the future you will find questions and answers from different accounting courses on this page. You will also find key points, formulas, and important notes on more complicated sections. From time to time I will upload or link great accounting articles found at other websites, journals, or books. So as much as you find this website helpful, I must mention that it will mostly help me for it will constantly keep me in touch with the world of accounting.

If you have any questions, suggestions, concerns, criticism and etc. please go to the "contact" section of the page and contact me. I'm looking forward to your responses, and wish me luck.