Financial accounting

Cover
Financial Accounting
Dedication
About the Authors
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Market-Leading Pedagogy and content
Practice is key to Success in Financial Accounting
What's New in the 11th edition
Online Assignments
Acknowledgments
Contents in Brief
Contents
Chapter One: Financial Statements and Business Decisions
	Le-Nature's Inc.
	Understanding the Business
	The Four Basic Financial Statements: An Overview
		The Balance Sheet
		financial analysis: Interpreting Assets, Liabilities, and Stockholders' Equity on the Balance Sheet
		Pause for Feedback
		The Income Statement
		financial analysis: Analyzing the Income Statement: Beyond the Bottom Line
		Pause for Feedback
		Statement of Stockholders' Equity
		financial analysis: Interpreting Retained Earnings
		Pause for Feedback
		Relationships Among the Income Statement, Statement of StockholdersÕ Equity, and Balance Sheet
		Pause for Feedback
		Statement of Cash Flows
		financial analysis: Interpreting the Cash Flow Statement
		Pause for Feedback
		Notes and Financial Statement Formats
		Summary of the Four Basic Financial Statements
	Responsibilities For The Accounting Communication Process
		Generally Accepted Accounting Principles
		international perspective: The International Accounting Standards Board and Global Accounting Standards
		Ensuring the Accuracy of Financial Statements
		Demonstration Case
		Chapter Supplement A: Types of Business Entities
		Chapter Supplement B: Employment in the Accounting Profession Today
		Chapter Take-Aways
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Cases and Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Two: Investing and Financing Decisions and the Accounting System
	Chipotle Mexican Grill
	Understanding the Business
	What Information is Included in the Balance Sheet?
		Recognition and Measurement Concepts
		Elements of the Balance Sheet
		Pause for Feedback
		financial analysis: Unrecorded but Valuable Assets and Liabilities
	What Business Activities Cause Changes In Financial Statement Amounts?
		Nature of Business Transactions
		Accounts
	How Do Transactions Affect Accounts?
		Principles of Transaction Analysis
		Analyzing Common Transactions
		Pause for Feedback
	How Do Companies Keep Track of AccountÊBalances?
		The Direction of Transaction Effects
		Pause for Feedback
		Analytical Tools
		financial analysis: Inferring Business Activities from T-Accounts
		Transaction Analysis Illustrated
		Pause for Feedback
		data analytics: Using Data Analytics for Business Expansion
	How is the Balance Sheet Prepared and Analyzed?
		Classified Balance Sheet
		international perspective: Understanding Foreign Financial Statements
		Ratio Analysis in Decision Making
		key ratio analysis: Current Ratio
		Pause for Feedback
		focus on cash flows: Investing and Financing Activities
		Pause for Feedback
		Demonstration Case
		Chapter Take-Aways
		Key Ratio
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Cases And Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Three: Operating Decisions and the Accounting System
	Chipotle Mexican Grill
	Understanding the Business
	How do Business Activities Affect theÊIncome Statement?
		The Operating Cycle
		Elements of the Income Statement
		data analytics: Using Data Analytics in the Restaurant Industry to Increase Revenues and Decrease Costs
	How are Operating Activities Recognized and Measured?
		Accrual Accounting
		Pause for Feedback
		Pause for Feedback
		a question of ethics: ManagementÕs Incentives to Violate Accounting Rules
	The Expanded Transaction Analysis Model
		Transaction Analysis Rules
		Analyzing Common Transactions
		Pause for Feedback
	How is the Income Statement Prepared and Analyzed?
		Classified Income Statement
		key ratio analysis: Net Profit Margin Ratio
		focus on cash flows: Operating Activities
		Pause for Feedback
		Demonstration Case
		Chapter Take-Aways
		Key Ratio
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Comprehensive Problem (Chapters 1_3)
		Cases And Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Four: Adjustments, Financial Statements, and the Closing Process
	Chipotle Mexican Grill
	Understanding the Business
	Adjusting Revenues And Expenses
		Accounting Cycle
		Purpose of Adjustments
		Adjustment Process
		Pause for Feedback
		a question of ethics: Adjustments and Incentives
	Preparing Financial Statements
		Income Statement
		Statement of StockholdersÕ Equity
		Balance Sheet
		focus on cash flows: Cash Flows from Operations, Net Income, and the Quality of Earnings
		KEY RATIO ANALYSIS: Total Asset Turnover Ratio
		data analytics: The SEC Uses Data Analytics
	Closing The Books
		End of the Accounting Cycle
		Pause for Feedback
		Post-Closing Trial Balance
		Demonstration Case
		Chapter Take-Aways
		Key Ratio
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Comprehensive Problems (Chapters 1_4)
		Cases And Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Five: Communicating and Analyzing Accounting Information
	Apple Inc.
	Understanding the Business
		a question of ethics: The Fraud Triangle
	Players In The Accounting Communication Process
		Regulators (SEC, FASB, PCAOB, Stock Exchanges)
		Managers (CEO, CFO, and Accounting Staff)
		Board of Directors (Audit Committee)
		Auditors
		data analytics: How Data Analytics Are Affecting What Auditors Do
		Information Intermediaries: Information Services andÊFinancialÊAnalysts
		financial analysis: Information Services and Your Job Search
		Users: Institutional and Private Investors, Creditors, and Others
		Pause for Feedback
	The Disclosure Process
		Press Releases
		Annual Reports and Form 10-K
		Quarterly Reports and Form 10-Q
		Other SEC Reports
		ENVIRONMENTAL, SOCIAL, & GOVERNANCE (ESG) REPORTING: Performance Beyond the Bottom Line
	A Closer Look At Financial Statement Formats And Notes
		Classified Balance Sheet
		Classified Income Statement
		financial analysis: Statement of Comprehensive Income
		Pause for Feedback
		key ratio analysis: Gross Profit Percentage
		Statement of StockholdersÕ Equity
		Statement of Cash Flows
		Notes to Financial Statements
		Voluntary Disclosures
		international perspective: Differences in Accounting Methods Acceptable under IFRS and U.S. GAAP
	Return On Assets Analysis: A Framework For Evaluating Company Performance
		key ratio analysis: Return on Assets (ROA)
		ROA Profit Driver Analysis and Business Strategy
		How Transactions Affect Ratios
		Pause for Feedback
		Demonstration Case
		Chapter Take-Aways
		Key Ratios
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problems
		Cases and Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Six: Reporting and Interpreting Sales Revenue, Receivables, and Cash
	Skechers U.S.A.
	Understanding the Business
	Accounting For Net Sales Revenue
		Motivating Sales and Collections
		Credit Card Sales to Consumers
		Sales Discounts to Businesses
		financial analysis: To Take or Not to Take the Discount, That Is the Question
		Sales Returns and Allowances
		Reporting Net Sales
		a question of ethics: Volume Discounts/Rebates and Earnings Misstatements at Monsanto
		Pause for Feedback
		Revenue Recognition for Bundled Goods and Services: A Five-Step Process
	Measuring and Reporting Receivables
		Classifying Receivables
		international perspective: Foreign Currency Receivables
		Accounting for Bad Debts
		financial analysis: Bad Debt Recoveries
		Reporting Accounts Receivable and Bad Debts
		Pause for Feedback
		Estimating Bad Debts
		Control over Accounts Receivable
		key ratio analysis: Receivables Turnover Ratio
		focus on cash flows: Accounts Receivable
		Pause for Feedback
	Reporting And Safeguarding Cash
		Cash and Cash Equivalents Defined
		Cash Management
		Internal Control of Cash
		a question of ethics: Ethics and the Need for Internal Control
		Reconciliation of the Cash Accounts and the Bank Statements
		Pause for Feedback
		Demonstration Case A
		Demonstration Case B
		Chapter Supplement: Recording Discounts and Returns
		Chapter Take-Aways
		Key Ratio
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Cases and Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Seven: Reporting and Interpreting Cost of Goods Sold and Inventory
	Harley-Davidson, Inc.
	Understanding the Business
	Nature of Inventory and Cost of Goods Sold
		Items Included in Inventory
		Costs Included in Inventory Purchases
		financial analysis: Applying the Materiality Constraint in Practice
		Flow of Inventory Costs
		Cost of Goods Sold Equation
		Pause for Feedback
		Perpetual and Periodic Inventory Systems
	Inventory Costing Methods
		Specific Identification Method
		Cost Flow Assumptions
		international perspective: LIFO and International Comparisons
		Financial Statement Effects of Inventory Methods
		Managers' Choice of Inventory Methods
		a question of ethics: LIFO and Conflicts Between ManagersÕ and OwnersÕ Interests
		Pause for Feedback
	Valuation at Lower of Cost or Net Realizable Value
	Control of Inventory
		Internal Control of Inventory
		Errors in Measuring Ending Inventory
		Pause for Feedback
	Evaluating Inventory Management
		Measuring Efficiency in Inventory Management
		key ratio analysis: Inventory Turnover
		Pause for Feedback
		Inventory Methods and Financial Statement Analysis
		financial analysis: LIFO and Inventory Turnover Ratio
		Pause for Feedback
		Inventory and Cash Flows
		focus on cash flows: Inventory
		Demonstration Case
		Chapter Supplement A: FIFO Cost of Goods Sold under Periodic and Perpetual Inventory Systems andÊEndÊof Period Adjustments to LIFO
		Chapter Supplement B: Additional Issues in Measuring Inventory Purchases
		Chapter Take-Aways
		Key Ratio
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Comprehensive Problem (Chapters 6_7)
		Cases and Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Eight: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources
	FedEx Corporation
	Understanding the Business
	Acquisition and Maintenance of Plant and Equipment
		Classifying Long-Lived Assets
		key ratio analysis: Fixed Asset Turnover
		Measuring and Recording Acquisition Cost
		Pause for Feedback
		Repairs, Maintenance, and Improvements
		a question of ethics: Worldcom: Hiding Billions in Expenses through Capitalization
		ENVIRONMENTAL, SOCIAL, & GOVERNANCE (ESG) REPORTING: Being a Global Citizen
		Pause for Feedback
	Use, Impairment, and Disposal of Plant and Equipment
		Depreciation Concepts
		financial analysis: Book Value as an Approximation of Remaining Life
		financial analysis: Differences in Estimated Lives within a Single Industry
		Alternative Depreciation Methods
		financial analysis: Impact of Alternative Depreciation Methods
		Pause for Feedback
		financial analysis: Increased Profitability Due to an Accounting Adjustment? Reading theÊNotes
		How Managers Choose
		a question of ethics: Two Sets of Books
		Measuring Asset Impairment
		Disposal of Property, Plant, and Equipment
		Pause for Feedback
	Intangible Assets and Natural Resources
		Acquisition and Amortization of Intangible Assets
		Acquisition and Depletion of Natural Resources
		focus on cash flows: Productive Long-lived Assets, Depreciation, and Amortization
		financial analysis: A Misinterpretation
		Demonstration Case A
		Demonstration Case B
		Chapter Supplement: Changes in Depreciation Estimates
		Pause for Feedback
		Chapter Take-Aways
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Comprehensive ProblemÊ(Chapters 6_8)
		Cases and Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Nine: Reporting and Interpreting Liabilities
	Starbucks
	Understanding the Business
	Liabilities Defined and Classified
	Current Liabilities
		Accounts Payable
		key ratio analysis: Accounts Payable Turnover
		Accrued Liabilities
		Deferred Revenues
		business analytics: Using mobile app data to understand customer behavior
		Notes Payable
		Current Portion of Long-Term Debt
		financial analysis: Refinancing Debt: Current or Long-Term Liability?
		Contingent Liabilities Reported on the Balance Sheet
		Contingent Liabilities Reported in the Footnotes
		international perspective: ItÕs a Matter of Degree
		Working Capital Management
		focus on cash flows: Working Capital and Cash Flows
		Pause for Feedback
	Long-Term Liabilities
		Long-Term Notes Payable and Bonds
		international perspective: Borrowing in Foreign Currencies
		Lease Liabilities
		Accounting for finance leases and operating leases
		Accounting for short-term leases
	Computing Present Values
		Present Value of a Single Amount
		Pause for Feedback
		Present Value of an Annuity
		a question of ethics: Truth in Advertising
		Accounting Applications of Present Values
		Demonstration Case
		Chapter Supplement A:  Present Value Computations Using a Calculator or Excel
		Chapter Supplement B: Deferred Taxes
		Chapter Take-Aways
		Key Ratio
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Cases And Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Ten: Reporting and Interpreting Bond Securities
	Amazon
	Understanding the Business
	Characteristics of Bond Securities
		Reasons Why Companies Issue Bonds
		Bond Terminology
		Bond Issuance Process
		financial analysis: Bond Rating Agencies and Their Assessments of Default Risk
	Reporting Bond Transactions
		data analytics: Using Artificial Intelligence (AI) to Invest in Bonds
		Pause for Feedback
		Bonds Issued at Par
		Pause for Feedback
		key ratio analysis: Times Interest Earned
		Bonds Issued at a Discount
		Pause for Feedback
		Bonds Issued at a Premium
		Pause for Feedback
		financial analysis: Zero Coupon Bonds
		key ratio analysis: Debt-to-Equity
	Early Retirement of Bonds
		focus on cash flows: Bond Transactions and the Statement of Cash Flows
		Demonstration Case
		Chapter Supplement: Accounting for Bonds without a Discount Account or Premium Account
		Pause for Feedback
		Bonds Issued at a Premium
		Pause for Feedback
		Chapter Take-Aways
		Key Ratios
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Cases and Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Eleven: Reporting and Interpreting StockholdersÕ Equity
	Microsoft
	Understanding the Business
		ENVIRONMENTAL, SOCIAL, & GOVERNANCE (ESG) REPORTING
	Ownership of a Corporation
		Benefits of Stock Ownership
		Authorized, Issued, and Outstanding Shares
		key ratio analysis: Earnings per Share (EPS)
	Common Stock Transactions
		Initial Sale of Stock
		Sale of Stock in Secondary Markets
		Stock Issued for Employee Compensation
		Repurchase of Stock
		Pause for Feedback
	Dividends on Common Stock
		key ratio analysis: Dividend Yield
		Key Dividend Dates
		financial analysis: Impact of Dividends on Stock Price
		Pause for Feedback
	Stock Dividends and Stock Splits
		Stock Dividends
		Stock Splits
		Pause for Feedback
	Statement Of StockholdersÕ Equity
		Pause for Feedback
	Preferred Stock Transactions
		Dividends on Preferred Stock
		financial analysis: Preferred Stock and Limited Voting Rights
		focus on cash flows: Financing Activities
		Demonstration Case
		Chapter Supplement: Accounting for the Equity of Sole Proprietorships and Partnerships
		Chapter Take-Aways
		Key Ratio
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Comprehensive Problem (Chapters 9_11)
		Cases and Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Twelve: Statement of Cash Flows
	National Beverage Corporation
	Understanding the Business
	Classifications of the Statement of Cash Flows
		Cash Flows from Operating Activities
		Cash Flows from Investing Activities
		Cash Flows from Financing Activities
		Net Increase (Decrease) in Cash
		Pause for Feedback
		Relationships to the Balance Sheet and Income Statement
		Preliminary Steps in Preparing the Cash Flow Statement
	Reporting and Interpreting Cash Flows from Operating Activities
		Reporting Cash Flows from Operating ActivitiesÑIndirect Method
		international perspective: Classification of Interest on the Cash Flow Statement
		Pause for Feedback
		Interpreting Cash Flows from Operating Activities
		key ratio analysis: Quality of Income Ratio
		a question of ethics: Fraud and Cash Flows from Operations
	Reporting and Interpreting Cash Flows from Investing Activities
		Reporting Cash Flows from Investing Activities
		Interpreting Cash Flows from Investing Activities
		key ratio analysis: Capital Acquisitions Ratio
		financial analysis: Free Cash Flow
	Reporting and Interpreting Cash Flows from Financing Activities
		Reporting Cash Flows from Financing Activities
		Interpreting Cash Flows from Financing Activities
		Pause for Feedback
	Completing the Statement and Additional Disclosures
		Statement Structure
		Supplemental Cash Flow Information
		Demonstration Case
		Chapter Supplement A: Reporting Cash Flows from Operating ActivitiesÑDirect Method
		Pause for Feedback
		Chapter Supplement B: Adjustment for Gains and Losses on Sale of Long-Term AssetsÑIndirect Method
		Chapter Supplement C: T-Account Approach (Indirect Method)
		Chapter Take-Aways
		Key Ratios
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Cases and Projects
		Business Analytics and Data Visualization with Excel and Tableau
Chapter Thirteen: Analyzing Financial Statements
	The Home Depot
	Understanding the Business
	The Investment Decision
	Understanding a CompanyÕs Strategy
	Financial Statement Analysis
		a question of ethics: Insider Information
	Component Percentages andÊRatioÊAnalysis
		Component Percentages
		business analytics: Using Data Visualization Tools to Assess a CompanyÕs Performance
		Ratio Analysis
		Profitability Ratios
		Pause for Feedback
		Asset Turnover Ratios
		financial analysis: ROA Profit Driver Analysis and the DuPont Model
		Liquidity Ratios
		Pause for Feedback
		Solvency Ratios
		Market Ratios
		Pause for Feedback
	Interpreting Ratios and Other Analytical Considerations
		Other Relevant Information
		ENVIRONMENTAL, SOCIAL, & GOVERNANCE (ESG) REPORTING
		Chapter Take-Aways
		Finding Financial Information
		Key Terms
		Questions
		Multiple-Choice Questions
		Mini-Exercises
		Exercises
		Problems
		Alternate Problems
		Continuing Problem
		Cases and Projects
Appendix A: Reporting and Interpreting Investments in Other Corporations
	The Walt Disney Company
Appendix B: Target Corporation, Form 10-K Annual Report
Appendix C: Walmart Inc., Form 10-K Annual Report
Appendix D: Industry Ratio Report
Appendix E: Present and Future Value Tables
Company Index
subject index