Table of Contents
Introduction: The Accounting Environment
Accounting Defined
Employment Opportunities in Accounting
Financial Accounting versus Managerial Accounting
Development of Financial Accounting Standards
Ethical Behavior of Accountants
Critical Thinking and Communication Skills
How to Study the Chapters in This Text
Part 1: Accounting: The Language of Business
Chapter 1. Accounting and its Use in Business Decisions
Forms of Business Organizations
Financial Statements of Business Organizations
The Financial Accounting Process
Analyzing and Using the Financial Results— The Equity Ratio
Appendix: A Comparison of Corporate Accounting with Accounting for Sole Proprietorships and Partnerships
Part 2: Processing Information for Decisions and Establishing Accounting Policy
Chapter 2: Recording Business Transactions
The Account and Rules of Debit and Credit
The Accounting Cycle
The Journal
The Ledger
The Accounting Process in Operation
The Use of Ledger Accounts
Analyzing and Using the Financial Results—Horizontal and Vertical Analyses
Chapter 3: Adjustments for Financial Reporting
Cash versus Accrual Basis Accounting
The Need for Adjusting Entries
Classes and Types of Adjusting Entries
Adjustments for Accrued Items
Adjustments for Deferred Items— A Second Look
Effects of Failing to Prepare Adjusting Entries
Analyzing and Using the Financial Results— Trend Percentages
Chapter 4: Completing the Accounting Cycle
The Accounting Cycle Summarized
The Work Sheet
Preparing Financial Statements
Journalizing Adjusting Entries
The Closing Process
Accounting Systems: From Manual to Computerized
A Classified Balance Sheet
Analyzing and Using the Financial Results— The Current Ratio
Chapter 5: Accounting Theory
Accounting Standards—Generally Accepted Accounting Principles
Objective of Financial Reporting
Underlying Assumptions
The Major Principles
Qualitative Characteristics
Enhancing Qualitative Characteristics
Pervasive Constraint
The Basic Elements of Financial Statements
Summary of Significant Accounting Principles
Chapter 6: Merchandising Transactions: Introduction to Inventories and the Classified Income Statement
Two Income Statements Compared: Service Company and Merchandising Company
Sales Revenues
Cost of Goods Sold
Classified Income Statement
Analyzing and Using the Financial Results— Gross Margin Percentage
Chapter 7: Measuring and Reporting Inventories
Inventories and Cost of Goods Sold
Determining Inventory Cost
Departures from Cost Basis of Inventory Measurement
Analyzing and Using Financial Results— Inventory Turnover Ratio
Part III: Management’s Perspectives in Accounting for Resources
Chapter 8: Control of Cash
Internal Control
Controlling Cash
The Bank Checking Account
Bank Reconciliation
Petty Cash Funds
Analyzing and Using the Financial Results— The Quick Ratio
Chapter 9: Receivables and Payables
Accounts Receivable
Current Liabilities
Notes Receivable and Notes Payable
Short-Term Financing through Notes Payable
Analyzing and Using the Financial Results— Accounts Receivable Turnover and Number of Days’ Sales in Accounts Receivable
Chapter 10: Property, Plant, and Equipment
Nature of Plant Assets
Initial Recording of Plant Assets
Depreciation of Plant Assets
Subsequent Expenditures (Capital and Revenue) on Assets
Subsidiary Records Used to Control Plant Assets
Analyzing and Using the Financial Results— Rate of Return on Operating Assets
Chapter 11: Plant Asset Disposals, Natural Resources, and Intangible Assets
Disposal of Plant Assets
Natural Resources
Intangible Assets
Plant Asset Disposals, Natural Resources, and Intangible Assets
Part IV: Sources of Equity Capital for Management’s Use in Producing Revenues
Chapter 12: Sources of Equity Capital for Management’s Use in Producing Revenues
The Corporation
Sources of Equity Capital for Management’s Use in Producing Revenues
Part Value and No-Par Capital Stock
Other Values Commonly Associated with Capital Stock
Capital Stock Authorized and Outstanding
Classes of Capital Stock
Types of Preferred Stock
Balance Sheet Presentation of Stock
Stock Issuance for Cash
Capital Stock Issued for Property
Balance Sheet Presentation of Paid-In Capital in Excess of Par (or Stated) Value— Common or Preferred
Analyzing and Using the Financial Results—Return on Average Common Stockholders’ Equity
Chapter 13: Corporations: Paid-In Capital, Retained Earnings, Dividends, and Treasury Stock
Paid-In (or Contributed) Capital
Retained Earnings
Paid-In Capital and Retained Earnings on the Balance Sheet
Retained Earnings Appropriation
Statement of Retained Earnings
Statement of Stockholders' Equity
Treasury Stock
Analyzing and Using the Financial Results— Earnings per Share and Price-Earnings Ratio
Chapter 14: Stock Investments
Fair Value and Equity Methods
Accounting for Short-Term Stock Investments and for Long-Term Stock Investments of Less Than 20%
The Equity Method for Long-Term Investments of between 20% and 50%
Reporting for Stock Investments of More Than 50%
Consolidated Balance Sheet at Time of Acquisition
Accounting for Income, Losses, and Dividends of a Subsidiary
Consolidated Financial Statements at a Date after Acquisition
Uses and Limitations of Consolidated Statements
Uses and Limitations of Consolidated Statements
Analyzing and Using the Financial Results— Dividend Yield on Common Stock and Payout Ratios
Chapter 15: Long-Term Financing: Bonds and Time Value of Money
Bonds Payable
Bond Prices and Interest Rates
Redeeming Bonds Payable
Analyzing and Using the Financial Results— Times Interest Earned Ratio
Part 5: The Managerial Environment
Chapter 16: An Introduction to Managerial Accounting
Organizations
Organizing to Achieve Objectives
The Basic Management Functions
Organizations—Their Differences and Similarities
Accounting, Information, and Management Action
Management, Accounting, and Financial Accounting
Management Accounting as a Recognized Discipline
The Certificate in Management Accounting (CMA)
Part 6: :Product Costing
Chapter 17: Managerial Accounting Concepts/Job Costing
Compare Managerial Accounting with Financial Accounting
Merchandiser and Manufacturer Accounting: Differences in Cost Concepts
Financial Reporting by Manufacturing Companies
The General Cost Accumulation Model
Job Costing
Predetermined Overhead Rates
Chapter 18: Process Cost Systems
Nature of a Process Cost System
Process Costing in Service Organizations
Spoilage
Chapter 19: Using Accounting for Quality and Cost Management
Importance of Good Accounting
Quality and Customer Satisfaction Measures
Just-in Time Method
Activity-Based Costing and Management
Methods Used for Activity-Based Costing
Impact of New Production Environment on Cost Drivers
Activity-Based Costing in Marketing
Strategic Use of Activity-Based Management
Behavioral and Implementation Issues
Opportunities to Improve Activity-Based Costing in Practice
Part 7: Using Cost Information for Decision-Making
Chapter 20: Cost-Volume-Profit Analysis
Cost Behavior Patterns
Methods for Analyzing Costs
Cost-Volume-Profit (CVP) Analysis
Finding the Break-Even Point
Cost-Volume-Profit Analysis Illustrated
Assumptions Made in Cost-Volume-Profit Analysis
Using Computer Spreadsheets for CVP Analysis
Effect of Automation on Cost-Volume-Profit Analysis
Chapter 21: Short-Term Decision Making: Differential Analysis
Contribution Margin Income Statements
Differential Analysis
Applications of Differential Analysis Opportunity Costs
Applying Differential Analysis to Quality
Part 8: Planning and Control
Chapter 22: Budgeting for Planning and Control
The Budget—For Planning and Control
The Master Budget Illustrated
Budgeting in Merchandising Companies
Budgeting in Service Companies
Additional Concepts Related to Budgeting
Chapter 23: Control Through Standard Costs
Uses of Standard Costs
Advantages and Disadvantages of Using Standard Costs
Computing Variance
Goods Completed and Sold
Investigating Variances from Standard
Disposing of Variances from Standard
Nonfinancial Performance Measures
Activity-Based Costing, Standards, and Variances
Chapter 24: Responsibility Accounting: Segmental Analysis
Responsibility Accounting
Responsibility Reports
Responsibility Centers
Transfer Prices
Use of Segmental Analysis
Concepts Used in Segmental Analysis
Investment Center Analysis
Economic Value Added and Residual Income
Segmental Reporting in External Financial Statements
Chapter 25: Capital Budgeting: Long-Range Planning
Part 9: Analysis of Financial Statements: Using the Statement of Cash Flows
Chapter 26: Analysis Using the Statement of Cash Flows
Purposes of the Statement of Cash Flows
Uses of the Statement of Cash Flows
Information in the Statement of Cash Flows
Cash Flows from Operating Activities
Steps in Preparing Statement of Cash Flows
Analysis of the Statement of Cash Flows
Analyzing and Using the Financial Results—Cash Flow per Share of Common Stock, Cash Flow Margin, and Cash Flow Liquidity Ratios
Chapter 27: Analysis and Interpretation of Financial Statements
Objectives of Financial Statement Analysis
Sources of Information
Horizontal Analysis and Vertical Analysis: An Illustration
Trend Percentages
Ratio Analysis
Final Considerations in Financial Statement Analysis
