Financial accounting

Cover
Title Page
Contents
Chapter 1
Business, Accounting, and You
	Business, Accounting, and You
	What Is a Business, and Why Study Accounting?
		The Definition of a Business
		The General Concept of Value
		Business Owners and Other Stakeholders
		The Goal of a BusinessThe goal of a business
	How Does a Business Operate?
		Resources Needed to Start and Operate a Business
		Operating the Business
		The Cost of Money
	How Are Businesses Organized?
		The Types of Businesses
		The Legal Forms of Businesses
	What Is Accounting, and What Are the Key Accounting
Principles and Concepts?
		Generally Accepted Accounting Principles
		International Financial Reporting Standards
		The Business Entity Principle
		The Reliability (Objectivity) Principle
		The Cost Principle
		Accounting Ethics: A Matter of Trust
	What Is the Role of Accountingin a Business?
		How Do You Recognize a Business Transaction?
		Cash Accounting
		Accrual Accounting
	How Do You Measure a BusinessTransaction?
	How Do You Record Business Transactions Using the Accounting Equation?
		Transaction Analysis
		Stockholders’ Equity
	How Do You Report Business Transactions Using Financial Statements?
		The Income Statement
		The Statement of Retained Earnings
		The Balance Sheet
		The Statement of Cash Flows
		Relationships Among the Financial Statements
	Accounting, Business, and You—Putting 
It All Together
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
Chapter 2
Analyzing and Recording Business
Transactions
	Business, Accounting, and You
	How Are Accounts Used to Keep Business Transactions
Organized?
		Organizing Accounts
		Assets
		Liabilities
		Stockholders’ Equity
	What Is Double-Entry Accounting?
		Normal Balance
	How Are the General Journal and GeneralLedger Used to Keep Track of BusinessTransactions?
		Transaction Analysis
		Applying Transaction Analysis
		Balancing the T-Accounts
	How Is a Trial Balance Prepared, and WhatIs It Used For?
		Correcting Errors
		Preparation of Financial Statements
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
Chapter 3
Adjusting and Closing Entries
	Business, Accounting, and You
	How Does a Company Accurately Report Its Income?
		Revenue Recognition and Matching Principles
	What Is the Role of Adjusting Entries, and When
Are They Prepared?
		Accruing Revenues
		Accruing Expenses
		Adjusting Deferred Revenues
		Adjusting Deferred Expenses
	How Are Financial Statements Prepared from an Adjusted Trial Balance?
		The Adjusted Trial Balance
		Preparing the Financial Statements
	How Does a Company Prepare
for a New Accounting Period?
		Completing the Accounting Cycle
		The Three Closing Entries: Revenues, Expenses, and Dividends
		Post-Closing Trial Balance
		Summary of the Adjusting and Closing Processes
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
	Comprehensive Problem
Chapter 4
Accounting for a Merchandising
Business
	Business, Accounting, and You
	What Are the Relationships Among
Manufacturers, Wholesalers, Retailers,
and Customers?
	How Do Periodic and Perpetual Inventory Systems Differ?
	How Do You Account for the Purchaseof Inventory?
		Cash and Credit Purchases
		Purchase Returns and Allowances
		Purchase Discounts
	How Do You Account for the Sale 
of Inventory?
		Cash Sales
		Credit Sales
		Sales Returns and Allowances
		Sales Returns
		Sales Allowances
		Sales Discounts
	How Do You Account for Freight Charges and Other Selling Expenses?
		Costs Related to the Receipt of Goods from Suppliers
		Costs Related to Delivering Goods to Customers
		Other Selling Costs
	How Do You Prepare a Merchandiser’s Financial Statements?
		The Income Statement
		The Statement of Retained Earnings
		The Balance Sheet
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
Chapter 5 
Inventory
	Business, Accounting, and You
	What Inventory Costing Methods Are Allowed?
		Cost Flow Versus Physical Flow of Inventory
	How Are the Four Inventory Costing 
Methods Applied?
		Inventory Cost Flows
		Specific-Identification Method
		First-In, First-Out (FIFO) Method
		Last-In, First-Out (LIFO) Method
		Average Cost Method
		Journalizing Inventory Transactions
	What Effect Do the Different Costing Methods Have on Net Income?
	What Else Determines How Inventory 
Is Valued?
	How Is Inventory Reported on the Balance Sheet?
		Inventory Shrinkage
	How Do Inventory Errors Affect the Financial Statements?
	Is It Possible to Estimate the Value of Inventory If the Inventory Is Accidentally Destroyed?
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
	Comprehensive Problem
Chapter 6 The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics
	Business, Accounting, and You
	What Are the Rules that Govern
Accounting?
		Understandable
		Relevant
		Reliable
		Generally Accepted Accounting Principles (GAAP) in the United States
		Generally Accepted Accounting Principles Around the World: IFRS
		Differences Between FASB and IFRS
	What Is Internal Control?
		Elements of an Internal Control System
	What Is Fraud, and Who Commits It?
		Management Fraud
		Employee Embezzlement
		The Factors Usually Present When Fraud Is Committed
	What Is a Certified Public Accountant (CPA)?
		Audits
		Audit Opinions
	What Are the Legal and Ethical Responsibilities of Accountants?
		The Legal Responsibilities of Accountants
		Ethical Responsibilities of Accountants
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
Chapter 7
Cash and Receivables
	Business, Accounting, and You
	What Are the Different Types of Sales?
		Cash Sales
		Credit Card Sales
		Debit Card Sales
		Credit/Debit Card Processing
		Sales on Account
	What Internal Control Procedures Should Be Used for Cash?
		Internal Controls over Cash Receipts
		Internal Control over Cash Payments
		Purchase and Payment Process
		The Bank Reconciliation
		Preparing the Bank Reconciliation
		Book Side of the Reconciliation
		Online Banking
	How Is Cash Reported on the Balance Sheet?
	How Do You Account for Receivables?
		Types of Receivables
		Internal Control over Accounts Receivable
		Accounting for Uncollectible Accounts Receivable
	How Do You Account for Uncollectible Accounts?
		The Direct Write-Off Method
		Direct Write-Off Method: Recovery of Accounts Previously Written Off
		The Allowance Method
		Estimating the Amount of Uncollectible Accounts
		Writing Off Uncollectible Accounts Under the Allowance Method
		Allowance Method: Recovery of Accounts Previously Written Off
	How Are Accounts Receivable Reported on the Balance Sheet?
	How Do You Account for Notes Receivable?
		Identifying the Maturity Date
		Origination of Notes Receivable
		Computing Interest on a Note
		Accruing Interest Revenue
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
	Appendix 7A
	What Is a Petty Cash Fund?
		Setting Up the Petty Cash Fund
		Replenishing the Petty Cash Fund
		Changing the Petty Cash Fund
	Accounting Practice
Chapter 8
Long-Term and Other Assets
	Business, Accounting, and You
	What Are the Different Types of Long-Term Assets?
	How Is the Cost of a Fixed Asset Calculated?
		land and land improvements
		Buildings
		Machinery and Equipment
		Furniture and Fixtures
		Lump-Sum (Basket) Purchase of Assets
	How Are Fixed Assets Depreciated?
		Measuring Depreciation
		Depreciation Methods
		Comparing Depreciation Methods
		Partial Year Depreciation
		Changing the Useful Life of a Depreciable Asset
		Using Fully Depreciated Assets
	How Are Costs of Repairing Fixed Assets Recorded?
		Ordinary Repairs
		Extraordinary Repairs
		Betterments
	What Happens When a Fixed Asset Is Disposed?
	How Do You Account for Intangible Assets?
		Specific Intangibles
		Accounting for Research and Development Costs
	How Are Natural Resources Accounted For?
	What Are Other Assets?
	How Are Long-Term Assets Reported on the Balance Sheet?
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
Chapter 9
Current Liabilities and Long-Term
Debt
	Business, Accounting, and You
	What Are the Differences Among Known, Estimated, and Contingent Liabilities?
	How Do You Account for Current Liabilities of a Known Amount?
		Accounts Payable
		Notes Payable
		Sales Tax Payable
		Accrued Expenses (Accrued Liabilities)
		Unearned Revenues
		Current Portion of Long-Term Debt
	How Do You Account for Current Liabilities of an Uncertain Amount?
		Estimated Warranty Liability
	How Do You Account for a Contingent Liability?
	How Do You Account for Long-Term Debt?
		Notes Payable
		Bonds Payable
		Lease Liabilities
	How Are Liabilities Reported on the Balance Sheet?
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
Chapter 10 Corporations: Paid-In Capital and Retained Earnings
	Business, Accounting, and You
	How Are Corporations Organized?
	What Makes Up the Stockholders’ Equity of a Corporation?
		Stockholders’ 
Rights
		Classes of Stock
		Par Value, Stated Value, and No-Par Stock
	How Is the Issuance of Stock Recorded?
		Issuing Common Stock
		Issuing Preferred Stock
	How Are Cash Dividends Accounted For?
		Dividend Dates
		Declaring and Paying Dividends
		Dividing Dividends Between Preferred and Common Shareholders
		Dividends on Cumulative and Noncumulative Preferred Stock
	How Are Stock Dividends and Stock Splits Accounted For?
		Stock Dividends
		Recording Stock Dividends
		Stock Splits
		Stock Dividends and Stock Splits Compared
	How Is Treasury Stock Accounted For?
		Treasury Stock Basics
		Purchase of Treasury Stock
		Sale of Treasury Stock
	How Is Stockholders’ Equity Reported on the Balance Sheet?
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
Chapter 11 The Statement of Cash Flows
	Business, Accounting, and You
	What Is the Statement of Cash Flows?
	How Does a Business Create a Statement of Cash Flows?
		The Logic of How the Statement of Cash Flows Is Prepared
		Sources and Uses of Cash: Categorizing Changes as Operating, Investing, or Financing
		Statement of Cash Flows: Two Formats
	How Is the Statement of Cash Flows Prepared Using the Indirect Method?
		Cash Flows from Operating Activities
		Cash Flows from Investing Activities
		Cash Flows from Financing Activities
		Net Change in Cash and Cash Balances
		Noncash Investing and Financing Activities
	How Is the Statement of Cash Flows Prepared Using the Direct Method?
		Cash Flows from Operating Activities
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
	Comprehensive Problem
Chapter 12 Financial Statement Analysis
	Business, Accounting, and You
	What Is Financial Analysis?
		Step One: Understand a Business’s Model and Strategy
		Step Two: Understand the Environment in Which a BusinessOperates
		Step Three: Analyze the Content of the Financial Statements and Other Information, Making Adjustments If Desired
		Step Four: Analyze the Business’s Operations
		Step Five: Use the Financial Analysis to Make Decisions
	What Measures Does Someone Use to Analyze the Performance of a Business?
		The Techniques of Financial Analysis
		Vertical Analysis
		Horizontal Analysis
		Trend Percentages
		Question 1: Is the Business a Going Concern?
		An Example: Tucker Enterprises, Inc.
		Question 2: How Is the Business Earning a Net Income or Loss?
		An Example: Tucker Enterprises, Inc.
		Question 3: Where Is the Business Getting Its Money, and Can It Pay Its Debt Obligations?
		An Example: Tucker Enterprises, Inc.
		Question 4: How Is the Business Investing Its Money, and Is It Using Its Assets Efficiently?
		An Example: Tucker Enterprises, Inc.
		Question 5: Is the Business Generating Enough Net Income to Reward the Stockholders for the Use of Their Money?
		An Example: Tucker Enterprises, Inc.
	How Do You Put Everything Together to Make Decisions?
		Seeing the Impact of Decisions
		What Are Red Flags in Financial Statement Analysis?
	Summary
	Accounting Practice
	Apply Your Knowledge
	Know Your Business
Appendix A Columbia Sportswear Company 2012 Annual Report to Shareholders
Appendix B
Time Value of Money—Future and
Present Value Concepts
Future Value
	Future-Value Tables
	Future Value of an Annuity
Present Value
	Present-Value Tables
	Present Value of an Annuity
Accounting Practice
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Credits