Survey of Accounting [3 ed.] 0078110858, 9780078110856

Table of contents :
Title
Contents
Chapter 1 An Introduction to Accounting
Chapter Opening
Role of Accounting in Society
Using Free Markets to Set Resource Priorities
Accounting Provides Information
Types of Accounting Information
Nonbusiness Resource Usage
Careers in Accounting
Measurement Rules
Reporting Entities
Elements of Financial Statements
Using Accounts to Gather Information
Accounting Equation
Recording Business Events under the Accounting Equation
Asset Source Transactions
Asset Exchange Transactions
Another Asset Source Transaction
Asset Use Transactions
Summary of Transactions
Recap: Types of Transactions
Preparing Financial Statements
Income Statement and the Matching Concept
Statement of Changes in Stockholders’ Equity
Balance Sheet
Statement of Cash Flows
The Closing Process
The Horizontal Financial Statements Model
Real-World Financial Reports
Annual Report for Target Corporation
Special Terms in Real-World Reports
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 2 Understanding the Accounting Cycle
Chapter Opening
Accrual Accounting
Accounting for Accounts Receivable
Other Events
Accounting for Accrued Salary Expense (Adjusting Entry)
Summary of Events and General Ledger
Vertical Statements Model
The Closing Process
Steps in an Accounting Cycle
The Matching Concept
The Conservatism Principle
Second Accounting Cycle
Prepaid Items (Cost versus Expense)
Accounting for Receipt of Unearned Revenue
Accounting for Supplies Purchase
Other 2013 Events
Adjusting Entries
Accounting for Supplies (Adjusting Entry)
Accounting for Prepaid Rent (Adjusting Entry)
Accounting for Unearned Revenue (Adjusting Entry)
Accounting for Accrued Salary Expense (Adjusting Entry)
Summary of Events and General Ledger
Vertical Statements Model
Transaction Classification
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 3 Accounting for Merchandising Businesses
Chapter Opening
Product Costs Versus Selling and Administrative Costs
Allocating Inventory Cost between Asset and Expense Accounts
Perpetual Inventory System
Effects of 2012 Events on Financial Statements
Financial Statements for 2012
Transportation Cost, Purchase Returns and Allowances, and Cash Discounts Related to Inventory Purchases
Effects of 2013 Events on Financial Statements
Accounting for Purchase Returns and Allowances
Purchase Discounts
The Cost of Financing Inventory
Accounting for Transportation Costs
Recognizing Gains and Losses
Multistep Income Statement
Lost, Damaged, or Stolen Inventory
Adjustment for Lost, Damaged, or Stolen Inventory
Events Affecting Sales
Accounting for Sales Returns and Allowances
Accounting for Sales Discounts
Common Size Financial Statements
A Look Back
A Look Forward
Appendix
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 4 Internal Controls, Accounting for Cash, and Ethics
Chapter Opening
Key Features of Internal Control Systems
Separation of Duties
Quality of Employees
Bonded Employees
Required Absences
Procedures Manual
Authority and Responsibility
Prenumbered Documents
Physical Control
Performance Evaluations
Limitations
Accounting for Cash
Controlling Cash
Checking Account Documents
Reconciling the Bank Account
Determining True Cash Balance
Illustrating a Bank Reconciliation
Importance of Ethics
Common Features of Criminal and Ethical Misconduct
Role of the Independent Auditor
The Financial Statement Audit
Materiality and Financial Audits
Types of Audit Opinions
Confidentiality
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 5 Accounting for Receivables and Inventory Cost Flow
Chapter Opening
Allowance Method of Accounting for Uncollectible Accounts
Accounting Events Affecting the
Period
Accounting Events Affecting the
Period
Estimating Uncollectible Accounts Expense Using the Percent of Revenue (Sales) Method
Analysis of Financial Statements
Estimating Uncollectible Accounts Expense Using the Percent of Receivables Method
Matching Revenues and Expenses versus Asset Measurement
Accounting for Notes Receivable (Promissory Notes)
How Accounting for Notes Receivable Affects Financial Statements
Accounting for Credit Card Sales
Inventory Cost Flow Methods
Specific Identification
First-In, First-Out (FIFO)
Last-In, First-Out (LIFO)
Weighted Average
Physical Flow
Effect of Cost Flow on Financial Statements
Effect on Income Statement
Effect on Balance Sheet
Inventory Cost Flow under a Perpetual System
Multiple Layers with Multiple Quantities
Allocating Cost of Goods Available for Sale
Effect of Cost Flow on Financial Statements
A Look Back
A Look Forward
Self-Study Review Problem 1
Self-Study Review Problem 2
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 6 Accounting for Long-Term Operational Assets
Chapter Opening
Tangible versus Intangible Assets
Tangible Long-Term Assets
Intangible Assets
Determining the Cost of Long-Term Assets
Basket Purchase Allocation
Methods of Recognizing Depreciation Expense
Dryden Enterprises Illustration
Straight-Line Depreciation
Financial Statements
Double-Declining-Balance Depreciation
Units-of-Production Depreciation
Comparing the Depreciation Methods
Revision of Estimates
Revision of Life
Revision of Salvage
Continuing Expenditures for Plant Assets
Costs That Are Expensed
Costs That Are Capitalized
Natural Resources
Intangible Assets
Trademarks
Patents
Copyrights
Franchises
Goodwill
Expense Recognition for Intangible Assets
Expensing Intangible Assets with Identifiable Useful Lives
Impairment Losses for Intangible Assets with Indefinite Useful Lives
Balance Sheet Presentation
Effect of Judgment and Estimation
Effect of Industry Characteristics
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 7 Accounting for Liabilities
Chapter Opening
Accounting for Current Liabilities
Accounting for Notes Payable
Accounting for Sales Tax
Contingent Liabilities
Warranty Obligations
Financial Statements
Accounting for Long-Term Debt
Installment Notes Payable
Line of Credit
Bond Liabilities
Bonds Issued at Face Value
Amortization Using the Straight-Line Method
Bonds Issued at a Discount
Bonds Issued at a Premium
Security for Loan Agreements
Current versus Noncurrent
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 8 Proprietorships, Partnerships, and Corporations
Chapter Opening
Forms of Business Organizations
Advantages and Disadvantages of Different Forms of Business Organization
Regulation
Double Taxation
Limited Liability
Continuity
Transferability of Ownership
Management Structure
Ability to Raise Capital
Appearance of Capital Structure in Financial Statements
Presentation of Equity in Proprietorships
Presentation of Equity in Partnerships
Presentation of Equity in Corporations
Characteristics of Capital Stock
Par Value
Stated Value
Other Valuation Terminology
Stock: Authorized, Issued, and Outstanding
Classes of Stock
Accounting for Stock Transactions on the Day of Issue
Issuing Par Value Stock
Stock Classification
Stock Issued at Stated Value
Stock Issued with No Par Value
Financial Statement Presentation
Stockholders’ Equity Transactions after the Day of Issue
Treasury Stock
Cash Dividend
Stock Dividend
Stock Split
Appropriation of Retained Earnings
Financial Statement Presentation
Investing in Common Stock
Receiving Dividends
Increasing the Price of Stock
Exercising Control through Stock Ownership
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 9 Financial Statement Analysis
Chapter Opening
Factors in Communicating Useful Information
The Users
The Types of Decisions
Information Analysis
Methods of Analysis
Horizontal Analysis
Vertical Analysis
Ratio Analysis
Measures of Debt-Paying Ability
Liquidity Ratios
Solvency Ratios
Measures of Profitability
Measures of Managerial Effectiveness
Stock Market Ratios
Presentation of Analytical Relationships
Limitations of Financial Statement Analysis
Different Industries
Changing Economic Environment
Accounting Principles
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 10 An Introduction to Managerial Accounting
Chapter Opening
Differences between Managerial and Financial Accounting
Users and Types of Information
Level of Aggregation
Regulation
Information Characteristics
Time Horizon and Reporting Frequency
Product Costing in Manufacturing Companies
Tabor Manufacturing Company
Average Cost per Unit
Costs Can Be Assets or Expenses
Effect of Product Costs on Financial Statements
Materials Costs (Event 2)
Labor Costs (Event 4)
Overhead Costs (Event 8)
Total Product Cost
General, Selling, and Administrative Costs
Overhead Costs: A Closer Look
Manufacturing Product Cost Summary
Schedule of Cost of Goods Manufactured and Sold
Upstream and Downstream Costs
Product Costing in Service and Merchandising Companies
Just-in-Time Inventory
Just-in-Time Illustration
Statement of Ethical Professional Practice
A Look Back
A Look Forward
Appendix A
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 11 Cost Behavior, Operating Leverage, and Profitability Analysis
Chapter Opening
Fixed Cost Behavior
Operating Leverage
Calculating Percentage Change
Risk and Reward Assessment
Variable Cost Behavior
Risk and Reward Assessment
An Income Statement under the Contribution Margin Approach
Measuring Operating Leverage Using Contribution Margin
Cost Behavior Summarized
Mixed Costs (Semivariable Costs)
The Relevant Range
Context-Sensitive Definitions of Fixed and Variable
Determining the Break-Even Point
Equation Method
Contribution Margin per Unit Method
Determining the Sales Volume Necessary to Reach a Desired Profit
Calculating the Margin of Safety
A Look Back
A Look Forward
Self-Study Review Problem 1
Self-Study Review Problem 2
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 12 Cost Accumulation, Tracing, and Allocation
Chapter Opening
Determine the Cost of Cost Objects
Estimated versus Actual Cost
Assignment of Costs to Objects in a Retail Business
Identifying Direct and Indirect Costs
Cost Classifications—Independent and Context Sensitive
Allocating Indirect Costs to Objects
Selecting a Cost Driver
Behavioral Implications
Effects of Cost Behavior on Selecting the Most Appropriate Cost Driver
Using Volume Measures to Allocate Variable Overhead Costs
Allocating Fixed Overhead Costs
Allocating Costs to Solve Timing Problems
Aggregating and Disaggregating Individual Costs into Cost Pools
Cost Allocation: The Human Factor
Using Cost Allocations in a Budgeting Decision
Using Cost Drivers to Make Allocations
Choosing the Best Cost Driver
Controlling Emotions
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 13 Relevant Information for Special Decisions
Chapter Opening
Relevant Information
Sunk Cost
Opportunity Costs
Relevance Is an Independent Concept
Relevance Is Context-Sensitive
Relationship Between Relevance and Accuracy
Quantitative versus Qualitative Characteristics of Decision Making
Differential Revenue and Avoidable Cost
Relationship of Cost Avoidance to a Cost Hierarchy
Relevant Information and Special Decisions
Special Order Decisions
Outsourcing Decisions
Segment Elimination Decisions
Summary of Relationships Between Avoidable Costs and the Hierarchy of Business Activity
Equipment Replacement Decisions
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 14 Planning for Profit and Cost Control
Chapter Opening
The Planning Process
Three Levels of Planning for Business Activity
Advantages of Budgeting
Planning
Coordination
Performance Measurement
Corrective Action
Budgeting and Human Behavior
The Master Budget
Hampton Hams Budgeting Illustration
Sales Budget
Inventory Purchases Budget
Selling and Administrative Expense Budget
Cash Budget
Pro Forma Income Statement
Pro Forma Balance Sheet
Pro Forma Statement of Cash Flows
A Look Back
A Look Forward
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 15 Performance Evaluation
Chapter Opening
Decentralization Concept
Responsibility Centers
Controllability Concept
Preparing Flexible Budgets
Determining Variances for Performance Evaluation
Sales and Variable Cost Volume Variances
Interpreting the Sales and Variable Cost Volume Variances
Fixed Cost Considerations
Flexible Budget Variances
Calculating the Sales Price Variance
The Human Element Associated with Flexible Budget Variances
Need for Standards
Managerial Performance Measurement
Return on Investment
Qualitative Considerations
Factors Affecting Return on Investment
Residual Income
Calculating Multiple ROIs and/or RIs for the Same Company
Responsibility Accounting and the Balanced Scorecard
A Look Back
A Look Forward
Self-Study Review Problem 1
Self-Study Review Problem 2
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Chapter 16 Planning for Capital Investments
Chapter Opening
Capital Investment Decisions
Time Value of Money
Determining the Minimum Rate of Return
Converting Future Cash Inflows to Their Equivalent Present Values
Present Value Table for Single-Amount Cash Inflows
Present Value Table for Annuities
Software Programs That Calculate Present Values
Ordinary Annuity Assumption
Reinvestment Assumption
Techniques for Analyzing Capital Investment Proposals
Net Present Value
Internal Rate of Return
Techniques for Measuring Investment Cash Flows
Cash Inflows
Cash Outflows
Techniques for Comparing Alternative Capital Investment Opportunities
Net Present Value
Internal Rate of Return
Relevance and the Time Value of Money
Tax Considerations
Techniques That Ignore the Time Value of Money
Payback Method
Unadjusted Rate of Return
Real-World Reporting Practices
Postaudits
A Look Back
Appendix
Self-Study Review Problem
Key Terms
Questions
Multiple-choice Questions
Exercises
Problems
Analyze, Think, Communicate
Appendix A Accessing the EDGAR Database Through the Internet
Appendix B Annual Report for Portion of the Form 10-K for Target Corporation
Appendix C The Double-Entry Accounting System
Glossary
Photo Credits
Index

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