| Preface |
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xv | |
| Visual Walk-Through |
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xviii | |
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Chapter 1 The Financial Statements |
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1 | (52) |
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1 | (2) |
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Explain Why Accounting Is the Language of Business |
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3 | (3) |
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Who Uses Accounting Information? |
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4 | (1) |
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Two Kinds of Accounting: Financial Accounting and Management Accounting |
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4 | (1) |
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5 | (1) |
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Explain and Apply Underlying Accounting Concepts, Assumptions, and Principles |
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6 | (5) |
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8 | (1) |
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The Continuity (Going-Concern) Assumption |
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8 | (1) |
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The Historical Cost Principle |
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8 | (1) |
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The Stable-Monetary-Unit Assumption |
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9 | (2) |
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Apply the Accounting Equation to Business Organizations |
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11 | (3) |
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11 | (1) |
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12 | (2) |
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Evaluate Business Operations Through the Financial Statements |
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14 | (7) |
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The Income Statement Measures Operating Performance |
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14 | (2) |
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The Statement of Retained Earnings Shows What a Company Did with Its Net Income |
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16 | (1) |
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The Balance Sheet Measures Financial Position |
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17 | (3) |
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The Statement of Cash Flows Measures Cash Receipts and Payments |
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20 | (1) |
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Construct Financial Statements and Analyze the Relationships Among Them |
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21 | (2) |
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Evaluate Business Decisions Ethically |
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23 | (30) |
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End-of-Chapter Summary Problem |
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26 | (27) |
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Chapter 2 Transaction Analysis |
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53 | (60) |
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Spotlight: Whole Foods Market, Inc. |
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53 | (2) |
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Explain What a Transaction Is |
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55 | (1) |
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Define “r;Account,”r; and List and Differentiate Between Different Types of Accounts |
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55 | (2) |
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55 | (1) |
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56 | (1) |
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Stockholders' (Owners') Equity |
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56 | (1) |
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Show the Impact of Business Transactions on the Accounting Equation |
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57 | (11) |
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Example: Freddy's Auto Service, Inc. |
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57 | (6) |
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Transactions and Financial Statements |
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63 | (3) |
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Mid-Chapter Summary Problem |
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66 | (2) |
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Analyze the Impact of Business Transactions on Accounts |
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68 | (3) |
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68 | (1) |
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Increases and Decreases in the Accounts: The Rules of Debit and Credit |
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68 | (2) |
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Additional Stockholders' Equity Accounts: Revenues and Expenses |
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70 | (1) |
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Record (Journalize and Post) Transactions in the Books |
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71 | (7) |
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Copying Information (Posting) from the Journal to the Ledger |
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72 | (1) |
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The Flow of Accounting Data |
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73 | (4) |
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Accounts after Posting to the Ledger |
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77 | (1) |
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Construct and Use a Trial Balance |
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78 | (35) |
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79 | (1) |
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Correcting Accounting Errors |
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80 | (1) |
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80 | (1) |
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The Normal Balance of an Account |
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81 | (1) |
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81 | (1) |
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Analyzing Transactions Using Only T-Accounts |
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82 | (2) |
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End-of-Chapter Summary Problem |
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84 | (29) |
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Chapter 3 Accrual Accounting & Income |
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113 | (79) |
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Spotlight: Starbucks Corporation |
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113 | (2) |
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Explain How Accrual Accounting Differs from Cash-Basis Accounting |
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115 | (1) |
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Accrual Accounting and Cash Flows |
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116 | (1) |
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116 | (1) |
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Apply the Revenue and Expense Recognition Principles |
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116 | (3) |
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116 | (2) |
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The Expense Recognition Principle |
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118 | (1) |
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Ethical Issues in Accrual Accounting |
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119 | (1) |
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119 | (14) |
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Which Accounts Need to Be Updated (Adjusted)? |
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119 | (1) |
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Categories of Adjusting Entries |
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120 | (1) |
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120 | (3) |
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Depreciation of Plant Assets |
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123 | (2) |
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125 | (2) |
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127 | (1) |
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128 | (1) |
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Summary of the Adjusting Process |
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129 | (3) |
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The Adjusted Trial Balance |
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132 | (1) |
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Construct the Financial Statements |
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133 | (8) |
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Mid-Chapter Summary Problem |
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135 | (6) |
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141 | (4) |
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Classifying Assets and Liabilities Based on Their Liquidity |
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142 | (1) |
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Reporting Assets and Liabilities: Starbucks Corporation |
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143 | (1) |
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Formats for the Financial Statements |
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143 | (2) |
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Analyze and Evaluate a Company's Debt-Paying Ability |
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145 | (47) |
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145 | (1) |
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145 | (1) |
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146 | (1) |
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How Do Transactions Affect the Ratios? |
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146 | (4) |
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End-of-Chapter Summary Problem |
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150 | (42) |
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Chapter 4 Internal Control & Cash |
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192 | (53) |
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Spotlight: Cooking the Books: Mid-Atlantic Manufacturing Company Takes a Hit |
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192 | (3) |
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Describe Fraud and Its Impact |
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195 | (2) |
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197 | (1) |
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Explain the Objectives and Components of Internal Control |
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197 | (7) |
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The Sarbanes-Oxley Act (SOX) |
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198 | (1) |
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The Components of Internal Control |
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199 | (1) |
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Internal Control Procedures |
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200 | (2) |
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202 | (1) |
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203 | (1) |
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Internal Controls for E-Commerce |
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203 | (1) |
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203 | (1) |
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The Limitations of Internal Control---Costs and Benefits |
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204 | (1) |
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Design and Use a Bank Reconciliation |
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204 | (11) |
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205 | (1) |
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205 | (1) |
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205 | (1) |
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206 | (1) |
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207 | (1) |
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Preparing the Bank Reconciliation |
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208 | (3) |
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211 | (2) |
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Mid-Chapter Summary Problem |
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213 | (2) |
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Evaluate Internal Controls Over Cash Receipts and Cash Payments |
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215 | (3) |
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Cash Receipts Over the Counter |
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215 | (1) |
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215 | (1) |
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Controls Over Payment by Check |
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216 | (2) |
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Construct and Use a Cash Budget |
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218 | (2) |
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Report Cash on the Balance Sheet |
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220 | (25) |
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Compensating Balance Agreements |
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220 | (1) |
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End-of-Chapter Summary Problem |
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221 | (24) |
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Chapter 5 Short-Term Investments & Receivables |
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245 | (55) |
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Spotlight: Amazing Apple! Short-term investments and accounts receivable are 37 times as large as inventories! |
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245 | (2) |
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Account for Short-Term Investments |
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247 | (7) |
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Reasons to Invest in Other Companies |
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247 | (1) |
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248 | (4) |
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Reporting on the Balance Sheet and the Income Statement |
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252 | (1) |
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Ethics and the Current Ratio |
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252 | (1) |
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Mid-Chapter Summary Problem |
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253 | (1) |
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Apply GAAP for Proper Revenue Recognition |
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254 | (2) |
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Shipping Terms, Sales Discounts, and Sales Returns |
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255 | (1) |
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Account for and Control Accounts Receivable |
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256 | (2) |
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256 | (1) |
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Internal Controls Over Cash Collections on Account |
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257 | (1) |
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How Do We Manage the Risk of Not Collecting? |
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257 | (1) |
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Evaluate Collectibility Using the Allowance for Uncollectible Accounts |
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258 | (8) |
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259 | (6) |
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265 | (1) |
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Computing Cash Collections from Customers |
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265 | (1) |
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Account for Notes Receivable |
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266 | (3) |
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Accounting for Notes Receivable |
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267 | (2) |
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Show How to Speed Up Cash Flow from Receivables |
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269 | (2) |
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Credit Card or Bankcard Sales |
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269 | (1) |
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Selling (Factoring) Receivables |
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270 | (1) |
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Reporting on the Statement of Cash Flows |
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270 | (1) |
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Evaluate Liquidity Using Two New Ratios |
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271 | (29) |
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271 | (1) |
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Days' Sales in Receivables |
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271 | (2) |
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End-of-Chapter Summary Problem |
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273 | (27) |
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Chapter 6 Inventory & Cost of Goods Sold |
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300 | (62) |
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Spotlight: Family Dollar Stores, Inc. |
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300 | (3) |
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Show How to Account for Inventory |
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303 | (5) |
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Sale Price vs. Cost of Inventory |
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304 | (2) |
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Accounting for Inventory in the Perpetual System |
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306 | (2) |
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Apply and Compare Various Inventory Cost Methods |
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308 | (8) |
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What Goes into Inventory Cost? |
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308 | (1) |
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Apply the Various Inventory Costing Methods |
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309 | (2) |
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Compare the Effects of FIFO, LIFO, and Average Cost on Cost of Goods Sold, Gross Profit, and Ending Inventory |
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311 | (1) |
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Keeping Track of Perpetual Inventories under LIFO and Weighted-Average Cost Methods |
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312 | (1) |
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The Tax Advantage of LIFO |
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313 | (1) |
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Mid-Chapter Summary Problem |
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314 | (2) |
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Explain and Apply Underlying GAAP for Inventory |
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316 | (2) |
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316 | (1) |
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Lower-of-Cost-or-Market Rule |
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316 | (2) |
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Inventory and the Detailed Income Statement |
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318 | (1) |
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Compute and Evaluate Gross Profit (Margin) Percentage and Inventory Turnover |
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318 | (2) |
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318 | (1) |
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319 | (1) |
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Use the COGS Model to Make Management Decisions |
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320 | (2) |
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Computing Budgeted Purchases |
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321 | (1) |
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Estimating Inventory by the Gross Profit Method |
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321 | (1) |
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Analyze Effects of Inventory Errors |
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322 | (40) |
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End-of-Chapter Summary Problem |
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325 | (37) |
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Chapter 7 Plant Assets, Natural Resources, & Intangibles |
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362 | (66) |
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Spotlight: FedEx Corporation |
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362 | (3) |
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Measure and Account for the Cost of Plant Assets |
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365 | (2) |
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365 | (1) |
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Buildings, Machinery, and Equipment |
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365 | (1) |
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Land Improvements and Leasehold Improvements |
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366 | (1) |
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Lump-Sum (or Basket) Purchases of Assets |
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366 | (1) |
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Distinguish a Capital Expenditure from an Immediate Expense |
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367 | (2) |
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Measure and Record Depreciation on Plant Assets |
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369 | (13) |
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How to Measure Depreciation |
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370 | (1) |
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370 | (5) |
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Comparing Depreciation Methods |
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375 | (2) |
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Mid-Chapter Summary Problem |
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377 | (1) |
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Other Issues in Accounting for Plant Assets |
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378 | (1) |
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Depreciation for Tax Purposes |
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378 | (2) |
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Depreciation for Partial Years |
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380 | (1) |
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Changing the Useful Life of a Depreciable Asset |
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380 | (2) |
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382 | (1) |
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Analyze the Effect of a Plant Asset Disposal |
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382 | (5) |
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Disposing of a Fully Depreciated Asset for No Proceeds |
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383 | (1) |
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383 | (1) |
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384 | (1) |
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T-Accounts for Analyzing Plant Asset Transactions |
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385 | (2) |
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Apply GAAP for Natural Resources and Intangible Assets |
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387 | (3) |
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Accounting for Natural Resources |
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387 | (1) |
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Accounting for Intangible Assets |
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388 | (1) |
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Accounting for Specific Intangibles |
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388 | (2) |
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Accounting for Research and Development Costs |
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390 | (1) |
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Explain the Effect of an Asset Impairment on the Financial Statements |
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390 | (2) |
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Analyze Rate of Return on Assets |
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392 | (2) |
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DuPont Analysis: A More Detailed View of ROA |
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393 | (1) |
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Analyze the Cash Flow Impact of Long-Lived Asset Transactions |
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394 | (34) |
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End-of-Chapter Summary Problem |
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397 | (31) |
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Chapter 8 Long-Term Investments & the Time Value of Money |
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428 | (54) |
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Spotlight: Intel Holds Several Different Types of Investments |
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428 | (2) |
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430 | (1) |
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Reporting Investments on the Balance Sheet |
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430 | (1) |
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Analyze and Report Investments in Held-to-Maturity Debt Securities |
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431 | (2) |
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Analyze and Report Investments in Available-for-Sale Securities |
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433 | (4) |
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Accounting Methods for Long-Term Stock Investments |
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433 | (2) |
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The Fair Value Adjustment |
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435 | (1) |
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Selling an Available-for-Sale Investment |
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436 | (1) |
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Analyze and Report Investments in Affiliated Companies Using the Equity Method |
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437 | (3) |
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Buying a Large Stake in Another Company |
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437 | (1) |
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Accounting for Equity-Method Investments |
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438 | (2) |
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Analyze and Report Controlling Interests in Other Corporations Using Consolidated Financial Statements |
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440 | (8) |
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Why Buy Controlling Interest in Another Company? |
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440 | (1) |
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440 | (1) |
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The Consolidated Balance Sheet and the Related Work Sheet |
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441 | (1) |
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Goodwill and Noncontrolling Interest |
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442 | (1) |
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Income of a Consolidated Entity |
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442 | (2) |
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Mid-Chapter Summary Problem |
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444 | (2) |
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Consolidation of Foreign Subsidiaries |
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446 | (1) |
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Foreign Currencies and Exchange Rates |
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446 | (1) |
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The Foreign-Currency Translation Adjustment |
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447 | (1) |
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Report Investing Activities on the Statement of Cash Flows |
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448 | (1) |
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Explain the Impact of the Time Value of Money on Certain Types of Investments |
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449 | (33) |
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450 | (1) |
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451 | (1) |
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Present Value of an Ordinary Annuity |
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452 | (2) |
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Using Microsoft Excel to Calculate Present Value |
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454 | (1) |
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Using the PV Model to Compute Fair Value of Available-for-Sale Investments |
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455 | (1) |
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Present Value of an Investment in Bonds |
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456 | (1) |
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End-of-Chapter Summary Problems |
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457 | (25) |
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482 | (68) |
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Spotlight: Southwest Airlines: Still Flying High! |
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482 | (2) |
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Account for Current and Contingent Liabilities |
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484 | (10) |
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Current Liabilities of Known Amount |
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484 | (6) |
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Current Liabilities That Must Be Estimated |
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490 | (1) |
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491 | (1) |
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Are All Liabilities Reported on the Balance Sheet? |
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492 | (1) |
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Summary of Current Liabilities |
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493 | (1) |
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Mid-Chapter Summary Problem |
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493 | (1) |
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Account for Bonds Payable, Notes Payable, and Interest Expense |
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494 | (16) |
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494 | (3) |
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Issuing Bonds Payable at Par (Face Value) |
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497 | (2) |
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Issuing Bonds Payable at a Discount |
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499 | (1) |
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What Is the Interest Expense on These Bonds Payable? |
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499 | (2) |
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Interest Expense on Bonds Issued at a Discount |
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501 | (3) |
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Partial-Period Interest Amounts |
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504 | (1) |
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Issuing Bonds Payable at a Premium |
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504 | (4) |
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The Straight-Line Amortization Method: A Quick and Dirty Way to Measure Interest Expense |
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508 | (1) |
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Should We Retire Bonds Payable Before Their Maturity? |
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509 | (1) |
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Convertible Bonds and Notes |
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509 | (1) |
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Analyze and Differentiate Financing with Debt Versus Equity |
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510 | (3) |
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512 | (1) |
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The Times-Interest-Earned Ratio |
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513 | (1) |
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Understand Other Long-Term Liabilities |
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513 | (3) |
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513 | (1) |
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513 | (1) |
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Do Lessees Prefer Operating Leases or Capital Leases? |
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514 | (1) |
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Pensions and Postretirement Liabilities |
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515 | (1) |
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516 | (2) |
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Reporting on the Balance Sheet |
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516 | (1) |
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Disclosing the Fair Value of Long-Term Debt |
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517 | (1) |
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Reporting Financing Activities on the Statement of Cash Flows |
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517 | (1) |
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End-of-Chapter Summary Problems |
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518 | (32) |
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Chapter 10 Stockholders' Equity |
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550 | (67) |
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Spotlight: The Home Depot: Building Toward Success |
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550 | (2) |
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Explain the Features of a Corporation |
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552 | (5) |
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553 | (1) |
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554 | (1) |
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555 | (1) |
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555 | (2) |
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Account for the Issuance of Stock |
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557 | (7) |
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557 | (3) |
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A Stock Issuance for Other Than Cash Can Create an Ethical Challenge |
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560 | (1) |
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561 | (1) |
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Mid-Chapter Summary Problem |
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562 | (2) |
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Authorized, Issued, and Outstanding Stock |
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564 | (1) |
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Show how Treasury Stock Affects a Company |
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564 | (3) |
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How Is Treasury Stock Recorded? |
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564 | (2) |
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Retirement of Treasury Stock |
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566 | (1) |
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566 | (1) |
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Issuing Stock for Employee Compensation |
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566 | (1) |
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Summary of Treasury-Stock Transactions |
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567 | (1) |
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Account for Retained Earnings, Dividends, and Splits |
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567 | (6) |
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Should the Company Declare and Pay Cash Dividends? |
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568 | (1) |
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568 | (1) |
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Analyzing the Stockholder's Equity Accounts |
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569 | (1) |
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Dividends on Preferred Stock |
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570 | (1) |
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571 | (1) |
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572 | (1) |
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Summary of the Effects on Assets, Liabilities, and Stockholders' Equity |
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573 | (1) |
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Use Stock Values in Decision Making |
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573 | (4) |
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Market, Redemption, Liquidation, and Book Value |
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573 | (2) |
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ROE: Relating Profitability to Stockholder Investment |
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575 | (2) |
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Report Stockholders' Equity Transactions in the Financial Statements |
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577 | (40) |
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577 | (1) |
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Statement of Stockholders' Equity |
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578 | (1) |
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A Detailed Stockholders' Equity Section of the Balance Sheet |
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579 | (2) |
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End-of-Chapter Summary Problems |
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581 | (36) |
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Chapter 11 Evaluating Performance: Earnings Quality, the Income Statement, & the Statement of Comprehensive Income |
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617 | (47) |
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Spotlight: The Gap, Inc.: What a Difference a Year Makes! |
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617 | (2) |
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Evaluate Quality of Earnings |
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619 | (4) |
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620 | (1) |
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Cost of Goods Sold and Gross Profit (Gross Margin) |
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621 | (1) |
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Operating and Other Expenses |
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622 | (1) |
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Operating Income (Earnings) |
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622 | (1) |
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Account for Foreign-Currency Gains and Losses |
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623 | (2) |
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Dollars versus Foreign Currency |
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623 | (1) |
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Reporting Foreign-Currency Gains and Losses on the Income Statement |
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624 | (1) |
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Reporting Foreign-Currency Exchange Gains and Losses on Cash and Cash Equivalents in the Statement of Cash Flows |
|
|
624 | (1) |
|
Should We Hedge Our Foreign-Currency-Transaction Risk? |
|
|
625 | (1) |
|
Account for Other Items on the Income Statement |
|
|
625 | (5) |
|
Interest Expense and Interest Income |
|
|
625 | (1) |
|
|
|
625 | (2) |
|
Which Income Number Predicts Future Profits? |
|
|
627 | (1) |
|
|
|
628 | (1) |
|
|
|
629 | (1) |
|
Compute Earnings per Share |
|
|
630 | (1) |
|
Analyze the Statement of Comprehensive Income, Footnotes, and Supplemental Disclosures |
|
|
631 | (3) |
|
Reporting Comprehensive Income |
|
|
631 | (1) |
|
For Additional Details, Don't Forget the Footnotes |
|
|
632 | (2) |
|
|
|
634 | (1) |
|
Differentiate Management's and Auditors' Responsibilities in Financial Reporting |
|
|
634 | (30) |
|
Management's Responsibility |
|
|
634 | (1) |
|
|
|
634 | (3) |
|
End-of-Chapter Summary Problems |
|
|
637 | (27) |
|
Chapter 12 The Statement of Cash Flows |
|
|
664 | (75) |
|
Spotlight: Google: The Ultimate Answer (and Cash) Machine |
|
|
664 | (2) |
|
Identify the Purposes of the Statement of Cash Flows |
|
|
666 | (2) |
|
How's Your Cash Flow? Telltale Signs of Financial Difficulty |
|
|
667 | (1) |
|
Distinguish Among Operating, Investing, and Financing Activities |
|
|
668 | (1) |
|
Two Formats for Operating Activities |
|
|
669 | (1) |
|
Prepare a Statement of Cash Flows by the Indirect Method |
|
|
669 | (15) |
|
Cash Flows from Operating Activities |
|
|
671 | (4) |
|
Cash Flows from Investing Activities |
|
|
675 | (1) |
|
Cash Flows from Financing Activities |
|
|
676 | (4) |
|
Noncash Investing and Financing Activities |
|
|
680 | (1) |
|
Mid-Chapter Summary Problem |
|
|
681 | (3) |
|
Prepare a Statement of Cash Flows by the Direct Method |
|
|
684 | (55) |
|
Cash Flows from Operating Activities |
|
|
685 | (2) |
|
Depreciation, Depletion, and Amortization Expense |
|
|
687 | (1) |
|
Cash Flows from Investing Activities |
|
|
687 | (1) |
|
Cash Flows from Financing Activities |
|
|
688 | (1) |
|
Noncash Investing and Financing Activities |
|
|
688 | (1) |
|
Computing Operating Cash Flows by the Direct Method |
|
|
689 | (4) |
|
Computing Investing and Financing Cash Flows |
|
|
693 | (1) |
|
Measuring Cash Adequacy: Free Cash Flow |
|
|
694 | (2) |
|
End-of-Chapter Summary Problems |
|
|
696 | (43) |
|
Chapter 13 Financial Statement Analysis |
|
|
739 | (82) |
|
Spotlight: How Well Is Amazon.com Doing? |
|
|
739 | (2) |
|
It Starts with the Big Picture |
|
|
741 | (2) |
|
Perform Horizontal Analysis |
|
|
743 | (6) |
|
Illustration: Amazon.com, Inc. |
|
|
743 | (5) |
|
|
|
748 | (1) |
|
Perform Vertical Analysis |
|
|
749 | (3) |
|
Illustration: Amazon.com, Inc. |
|
|
749 | (3) |
|
Prepare Common-Size Financial Statements |
|
|
752 | (1) |
|
|
|
753 | (1) |
|
Benchmarking Against a Key Competitor |
|
|
753 | (1) |
|
Analyze the Statement of Cash Flows |
|
|
753 | (4) |
|
Mid-Chapter Summary Problem |
|
|
756 | (1) |
|
Use Ratios to Make Business Decisions |
|
|
757 | (16) |
|
Remember to Start at the Beginning: Company and Industry Information |
|
|
758 | (1) |
|
|
|
759 | (1) |
|
Measuring Ability to Pay Current Liabilities |
|
|
759 | (3) |
|
Measuring Turnover and the Cash Conversion Cycle |
|
|
762 | (3) |
|
Measuring Leverage: Overall Ability to Pay Debts |
|
|
765 | (1) |
|
|
|
766 | (5) |
|
Analyzing Stock as an Investment |
|
|
771 | (2) |
|
The Limitations of Ratio Analysis |
|
|
773 | (1) |
|
Use Other Measures to Make Investment Decisions |
|
|
773 | (48) |
|
Economic Value Added (EVA®) |
|
|
773 | (1) |
|
Red Flags in Financial Statement Analysis |
|
|
774 | (1) |
|
|
|
775 | (3) |
|
End-of-Chapter Summary Problems |
|
|
778 | (43) |
| Appendix A Amazon.com 2012 Annual Report |
|
821 | (24) |
| Appendix B YUM! Brands, Inc. Annual Report 2012 |
|
845 | (18) |
| Appendix C Typical Charts of Accounts for Different Types of Businesses |
|
863 | (2) |
| Appendix D Summary of Generally Accepted Accounting Principles (GAAP) |
|
865 | (2) |
Appendix E Summary of Differences Between U.S. GAAP and IFRS Cross Referenced to
Chapter |
|
867 | (4) |
| Company Index |
|
871 | (4) |
| Glindex |
|
875 | |
