Accounting Principles

Cover
Title Page
Copyright
Dedication
Acknowledgements
Brief Contents
Contents
1 Accounting in Action
	Accounting Keeps Aritzia Fashionably in the Black
	Why Is Accounting Important?
		Using Accounting Information
		Objective of Financial Reporting
	Forms of Business Organization
		Proprietorship
		Partnership
		Corporation
	Generally Accepted Accounting Principles
		Ethics in Financial Reporting
		Conceptual Framework
		Accounting Standards
	The Accounting Model
		Financial Statements
		The Expanded Accounting Equation
	Transaction Analysis
	Preparing Financial Statements
		Income Statement
		Statement of Owner’s Equity
		Balance Sheet
		Cash Flow Statement
		Understanding the Information in the Financial Statements
2 The Recording Process
	Slaying the Dragons to Brew Up Sales
	The Account
		Debits and Credits
		Double-Entry Accounting
	Analyzing and Recording Transactions
		The Accounting Cycle and Steps in the Recording Process
		The Journal
	The Ledger
		Posting
		The Recording Process Illustrated
		Summary Illustration of Journalizing and Posting
	The Trial Balance
		Limitations of a Trial Balance
		Locating Errors
		Some Process Explanations
3 Adjusting the Accounts
	Advance Sports Revenue Is Just the Ticket
	Timing Issues
		Accrual Versus Cash Basis Accounting
		Revenue and Expense Recognition
	Adjusting Entries and Prepayments
		The Basics of Adjusting Entries
		Adjusting Entries for Prepayments
	Adjusting Entries for Accruals
	The Adjusted Trial Balance and Financial Statements
		Preparing the Adjusted Trial Balance
		Preparing Financial Statements
4 Completion of the Accounting Cycle
	Getting a Good “Handle” on Accounting Information
	Closing the Books
		Preparing Closing Entries
		Posting Closing Entries
		Preparing a Post-Closing Trial Balance
	Summary of the Accounting Cycle
		Steps in the Accounting Cycle
		Correcting Entries—An Avoidable Step
	Classified Balance Sheet
		Standard Balance Sheet Classifications
		Alternative Balance Sheet Presentation
	Using the Information in the Financial Statements
		Working Capital
		Current Ratio
		Acid-Test Ratio
	Appendix 4A: Work Sheets
		Steps in Preparing a Work Sheet
		Preparing Financial Statements from a Work Sheet
		Appendix 4B: Reversing Entries
		Accounting with and Without Reversing Entries
5 Accounting for Merchandising Operations
	A “Frank” Look at Tracking Inventory
	Merchandising Operations
		Inventory Systems
	Recording Purchases of Merchandise
		Subsidiary Inventory Records
		Freight Costs
		Purchase Returns and Allowances
		Discounts
		Summary of Purchase Transactions
	Recording Sales of Merchandise—Earnings Approach
		Revenue Recognition
		Freight Costs
		Sales Returns and Allowances
		Discounts
		Summary of Sales Transactions
		Sales Taxes
	Completing the Accounting Cycle
		Adjusting Entries
		Closing Entries
		Post-Closing Trial Balance
		Summary of Merchandising Entries in a Perpetual Inventory System
	Merchandising Financial Statements
		Single-Step Income Statement
		Multiple-Step Income Statement
		Classified Balance Sheet
	Using the Information in the Financial Statements
		Gross Profit Margin
		Profit Margin
	Appendix 5A: Periodic Inventory System
		Recording Purchases of Merchandise
		Recording Sales of Merchandise
		Comparison of Entries—Perpetual versus Periodic
		Calculating Cost of Goods Sold
		Multiple-Step Income Statement
		Completing the Accounting Cycle
	Appendix 5B: Recording Sales of Merchandise—Contract-Based Approach
		Recording Sales with Sales Returns
		Recording Sales with Sales Discounts
		Freight Costs
		Summary of Sales Transactions
		Sales Taxes
		Adjusting Entries
		Financial Statements
		Completing the Accounting Cycle
6 Inventory Costing
	A Fresh Approach to Costing Inventory
	Determining Inventory Quantities
		Taking a Physical Inventory
		Determining Ownership of Goods
	Inventory Cost Determination Methods
		Specific Identification
		Cost Formulas: FIFO and Weighted Average
	Financial Statement Effects
		Choice of Cost Determination Method
	Inventory Errors
	Presentation and Analysis of Inventory
		Valuing Inventory at the Lower of Cost and Net Realizable Value
	Reporting and Analyzing Inventory
		Presenting Inventory in the Financial Statements
	Appendix 6A: Inventory Cost Formulas in Periodic Systems
		Periodic System—First-In, First-Out (FIFO)
		Periodic System—Weighted Average
	Appendix 6B: Estimating Inventories
		Gross Profit Method
		Retail Inventory Method
7 Internal Control and Cash
	Keeping a Tight Lid on Cash
	Cash and Internal Control
		What Is Cash?
		Internal Control
		Control Activities
		Limitations of Internal Control
	Cash Controls
		Internal Control over Cash Receipts
		Internal Control over Cash Payments
	Petty Cash Fund
		Establishing the Fund
		Making Payments from the Fund
		Replenishing the Fund
	Bank Accounts
		Use of a Bank Account
		Reconciling the Bank Account
		Reporting Cash
8 Accounting for Receivables
	Last Call for Customer Payments
	Accounts Receivable
		Types of Receivables
		Recognizing Accounts Receivable
	Valuing Accounts Receivable
	Notes Receivable
		Recognizing Notes Receivable
		Disposing of Notes Receivable
	Statement Presentation and Management of Receivables
		Presentation
		Analysis
		Accelerating Cash Receipts from Receivables
9 Long-Lived Assets
	Capitalizing on Education
	Property, Plant, and Equipment
		Determining the Cost of Property, Plant, and Equipment
	Depreciation
		Factors in Calculating Depreciation
		Depreciation Methods
		Comparison of Depreciation Methods
		Partial Period Depreciation
		Depreciation and Income Tax
	Revising Periodic Depreciation
		Capital Expenditures During Useful Life
		Impairments
		Cost Model Versus Revaluation Model
		Changes in Depreciation Method, Estimated Useful Life, or Residual Value
		Revised Depreciation Calculations
	Disposal of Property, Plant, and Equipment
		Steps in Recording Disposals of Property, Plant, and Equipment
		Retirement of Property, Plant, and Equipment
		Sale of Property, Plant, and Equipment
		Exchanges of Property, Plant, and Equipment
	Natural Resources
		Cost
		Depletion
		Disposal
	Intangible Assets and Goodwill
		Accounting for Intangible Assets
		Intangible Assets with Finite Lives
		Intangible Assets with Indefinite Lives
		Goodwill
	Statement Presentation and Analysis
		Presentation
		Analysis
10 Current Liabilities and Payroll
	Butterflies Bring About Better Banknotes
	Determinable (Certain) Current Liabilities
		Accounts Payable
		Unearned Revenues
		Operating Line of Credit and Bank Overdraft
		Short-Term Notes Payable
		Sales Taxes
		Property Taxes
		Current Maturities of Long-Term Debt
	Uncertain Liabilities
		Provisions
		Contingencies
	Payroll
		Employee Payroll Costs
		Employer Payroll Costs
		Recording the Payroll
	Financial Statement Presentation
	Appendix 10A: Payroll Deductions
		Mandatory Payroll Deductions
		Using Payroll Deduction Tables
APPENDIX A Specimen Financial Statements: Aritzia Inc.
APPENDIX B Sales Taxes
APPENDIX C Subsidiary Ledgers and Special Journals
COMPANY INDEX
SUBJECT INDEX
EULA