| Preface | '1·3·1', the formula that builds accounting muscle in any brain

Chapter 1.
When and how will sales be reflected?
- When should product and merchandise sales be recorded in the ledger?
- Find the sales profit, which is calculated first in the income statement.
- What is the difference between manufacturing cost and cost of sales?
- I sold 8 million won worth of clothes, but my sales were only 2 million won? Is this creative accounting?
- Let's distinguish between net sales and gross sales recorded in financial statements.
- 100% direct purchase from Market Kurly, what if it's only an open market?
- The reason for the large sales gap between Gmarket and Coupang, Starbucks and Ediya.
Analyzing the sales structures of Shinsegae and Hyundai Department Stores
- If we change the sales standard, will profits change significantly?
Coupang and WeMakePrice have a 15x difference in sales, while product transactions are 4.3x different.
- How to recognize service sales, Megastudy's lecture service
- Recognition of revenue from technology export contracts for bio companies

Chapter 2.
How do manufacturing (production), cost, sales, and profit change in an intertwined manner?
- 4 steps to calculate profit and loss
- Refrigerator manufacturing cost and depreciation of machinery
- Changes in profits when production increases
- When does labor cost become manufacturing cost and when does it become selling and administrative expenses?
- Profit changes according to the proportion of variable and fixed costs
- The reason why profit fluctuations are greater than sales fluctuations: the operating leverage effect.
- How many lunch boxes do I need to sell to make a profit?
- Should I accept a bulk order where the unit delivery price is lower than the manufacturing cost?

Chapter 3.
Practical Analysis! Understanding Startup Business Structure and Income Statements
- Market Kurly's homework: variable costs are too high!
- Oasis, a prominent dawn delivery company, is its distribution method competitive?
- Will the increase in commissions, the primary contributor to Socar's operating loss, slow down?
Despite stagnant sales and a deficit for the first time in four years, Jikbang continues to invest in R&D.
Is SNS's popularity weakening? Blankcopper's unexpected operating loss
- Convertible preferred stock is not guilty!
- What is the number one sales share of Yanolja, the winner of the 'Sleep War'?
Why My Room (Unlimited Coupon Room) Business is Accounted for Advertising Revenue
Yanolja's rapidly growing accommodation business still runs at a loss.
Understanding the Difference Between Academy Lecture Sales and Textbook Sales
- How much is the daily lecturer's lecture fee, which is much higher than the salary of all employees?

Chapter 4.
The impact of changes in one's own values ​​on profit and loss
- Profit and loss transactions and non-profit transactions of E-Mart that purchased Baek Jong-won's sweet potatoes
- How are the increase and decrease in assets and profits and losses connected?
- What happens to the profit or loss from export receivables when the exchange rate falls?
- How are profits and losses reflected at the time of holding and settlement of export accounts receivable?
- Depreciating a 1 billion won machine using the straight-line method over 5 years
- After considering the value in use, fair value, and recoverable amount, it turns out that the tangible asset is impaired?
- Accounting method for allowance for bad debts, money with a high probability of being lost
- What is the net realizable value of inventory assets?
- How do oil refineries evaluate their inventory?
- “You are an asset to our company”, the CEO’s lie(?)
- Why is the exclusive contract fee for a daily instructor an asset?

Chapter 5.
Mastering the Increasingly Important Intangible Assets
- It seems like it's not a cost, but it's the cost of producing a drama and developing a new drug.
- Franchise trademark rights, gap between actual value and book value
- The book value of the trademark of a national hamburger brand is only a few million won.
Accounting for operating overseas with trademarks: K2 Korea's "Eider"
"Do I own the trademark for the franchise I founded? The owners are being taken to court."
- When will the capitalized new car development costs begin to be expensed?
- The polar opposite R&D expense capitalization rates of Hyundai Motor Company and Samsung Electronics
Helixmith's clinical failure controversy explains why its net loss has increased significantly.
- Studio Dragon, Song Joong-ki's large appearance fee is considered an asset
- How should the bonus money given during an acquisition or merger be recorded in the financial statements?
- Reveal the identity of the bonus money given at the time of acquisition!

Chapter 6.
View various debt and lease accounting at a glance
- Starbucks's player deposit debt is a whopping 129.1 billion won?
- The impact of exchange rate changes on profit and loss when borrowing and repaying dollar debt
- The dilemma of increasing losses as stock prices rise
The secret of a mutual aid company that generates net profit despite operating losses.
Distinguishing between down payment and down payment revenue - Samsung Heavy Industries, Megastudy
- Points and mileage giveaways generate sales and debt simultaneously - Korean Air, E-Mart
- Sometimes it's my asset, sometimes it's someone else's - Old Lease Accounting
Why did CJ CGV and Asiana Airlines' debt ratios soar? - New lease accounting
Even promises can become liabilities! Reserve liabilities
- What was holding back Asiana Airlines' audit opinion?
- It was born with long-term debt... Doosan Heavy Industries & Construction's liquid long-term debt

Chapter 7.
Equity method accounting, which can be both poison and medicine
Why SK Telecom records a stake worth 8 trillion won in market value at 11 trillion won.
- Status changes based on a 20% stake! Associated companies and the equity method
- How should I account for a company that I own 30% of when it reports net income?
- You say you have significant influence even though your stake is less than 20%?
- Samsung Publishing, thank you Baby Shark!
- SKT, who is the biggest contributor to net profit exceeding operating profit?
- Two things that make up non-operating income and expenses
- I hate the equity method! LG Electronics
- A loss-making affiliate may not end up with an equity method loss!
Will Genic, acquired for 70 billion won, become worthless? - Solbrain

Chapter 8.
Understanding Shareholders' Equity
- The absolute formula that cannot be changed, the financial statement identity
- The truth of financial statement identities: asset increases and decreases and profit and loss generation are intertwined!
- What changes will occur to assets and capital if paid-in capital increase occurs?
- Why retained earnings remain unchanged no matter how much a company invests
- What changes will occur to assets and capital if a capital increase is made without payment?
How to escape capital erosion with free potatoes
- What are the potato loss and potato profit that occur when selling potatoes for a fee?
Perpetual bonds that don't require principal repayment, the pressure of step-up interest rates - E-Mart

Chapter 9.
The principle of the cash flow statement that shows the health of a company
- I made a profit, but why don't I have any cash?
- The company's three major management activities are all reflected in the cash flow statement!
- Correcting net income to cash flow from operating activities - Adjusting non-cash income and expenses
- Two ways to capture cash flow: the income statement and the balance sheet.
- The impact of accounts receivable, inventory, and advance payments on cash flow
- The impact of accounts payable and advance payments on cash flow
- The cash flow statement is like a company's health checkup.
- A company with a net income of KRW 102.7 billion has a cash flow of -KRW 3.7 billion from operating activities.
Cash flow changed dramatically in just one quarter - KMW's turnaround
- Understanding cash flow from investing activities and cash flow from financing activities
The gap between Daewoo Shipbuilding & Marine Engineering's profits and cash flow reveals a clue to fraudulent accounting.

Chapter 10.
Consolidated Financial Statements and Financial Ratio Analysis
- A 'connected entity' that is economically one body, a parent company and a subsidiary
- Calculate profit and loss in consolidated financial statements and delete internal transactions
- Even if you increase sales and profits by using your dominance, you must correct it in consolidated accounting.
Why We Divide Net Income by Two - Top Engineering
- Why is the net profit of LG Electronics' controlling shareholder smaller than that of non-controlling shareholders?
- When are consolidated financial statements prepared?
How quickly is inventory sold? Calculate the inventory turnover ratio.
How quickly do you sell and collect? Accounts receivable turnover and sales cycle.
- What is the first thing an investor should look at in financial statements?

In just 3 minutes a day, you can see your financial statements and understand the flow of money!

Financial statements are a so-called "corporate health checkup" that contain information about a company's financial soundness, cash flow, operating capabilities, and growth potential.
Moreover, financial statements serve as a vivid management textbook for businessmen and a compass for investors.
The language used to describe financial statements is 'accounting'.
Accounting is the basis for 'rational decision-making' across all areas of business activities, including planning, marketing, sales, management, production, and research.
Accounting also has to be used to resolve concerns such as whether to accept bulk orders with a unit price lower than the manufacturing cost (page 68) or how many lunch boxes must be sold per day to break even (page 66).

- Clearly explain abstract accounting with intuitive pictures!

“I knew it when I was studying from a book, but I forgot it the moment I turned around.”
“Accounting knowledge just doesn’t seem to stick in my head.”

This is a complaint we've heard countless times from the authors of two accounting books, "This is Practical Accounting" and "I Almost Worked Without Knowing Accounting!"
The two authors put their heads together and pondered for a long time about a method of learning accounting that would not be forgotten even after turning away.
The answer they found was 'picture'.
A picture is worth a thousand words, and a picture is worth more than pages of text.

In this book, no matter which page you turn, there is text on the left and pictures on the right.
For those unfamiliar with accounting notations, financial statements, expressed solely in numbers, can seem difficult and abstract.
This book does not just blindly explain financial statements.
This diagram provides step-by-step explanations of accounting issues such as sales, expenses, and liabilities, the flow of accounting thinking, and accounting processing methods.
By following the diagram that details the process leading to financial statements, accounting thinking will naturally take root in the reader's mind.

- It takes only 3 minutes to master one topic!

This book compresses one topic into one page of text and one page of pictures.
Three minutes is enough time to read through one topic.
A little while before going to bed, a little while riding the subway, a little while waiting after pouring water into a cup of ramen… … .
Just as dripping water wears away a stone, if you add up three minutes a day, you will soon conquer accounting.

- 3 Steps to Building Accounting Muscles

Rather than explaining things theoretically, I tried to explain them more concretely using hypothetical examples.
By presenting various real-world examples, the book is designed to help readers naturally understand how the accounting knowledge they have learned is processed in actual corporate accounting, how it appears in financial statements, and what it means.

- A thorough analysis of the business structure and financial statements of trending startups.

Startups on the verge of going public, such as Market Kurly, Yanolja, Zigbang, Socar, Coupang, and Blank Corporation, have not had proper analysis despite strong investor interest.
Startups differ from general businesses in terms of revenue recognition, accounting issues they face, and how they handle them.
This book closely analyzes startups from an accounting perspective, including why Zigbang posted a deficit just four years after disclosing its financial statements and why Yanolja's room consignment sales revenue is counted as advertising revenue.
Last year, the biggest concern in the accounting field was the change in lease accounting standards.
Companies such as airlines, shipping companies, and distributors, which have a lot of leased assets due to the nature of their business, saw their debt ratios soar after applying new accounting standards.
This book also thoroughly examines the latest accounting issues, including comparing and analyzing past and new lease accounting.

If you're an accounting nomad who wanders through countless accounting books, burning your will and then getting frustrated, settle on this book.
This book will give you the fun of building your accounting muscles and the confidence that you can do it.