Horngren's Financial & Managerial Accounting, The Financial Chapters, Global Edition

Cover
Title Page
Copyright Page
About the Authors
Brief Contents
Contents
Changes to This Edition
Financial & Managerial Accounting . . . Expanding on Proven Success
Instructor and Student Resources
Acknowledgments
Chapter 1 Accounting and the Business Environment
	Why Is Accounting Important?
		Decision Makers: The Users of Accounting Information
		Accounting Matters
	What Are the Organizations and Rules That Govern Accounting?
		Governing Organizations
		Generally Accepted Accounting Principles
		The Economic Entity Assumption
		The Cost Principle
		The Going Concern Assumption
		The Monetary Unit Assumption
		International Financial Reporting Standards
		Ethics in Accounting and Business
	What Is the Accounting Equation?
		Assets
		Liabilities
		Equity
	How Do You Analyze a Transaction?
		Transaction Analysis for Smart Touch Learning
	How Do You Prepare Financial Statements?
		Income Statement
		Statement of Retained Earnings
		Balance Sheet
		Statement of Cash Flows
	How Do You Use Financial Statements to Evaluate Business Performance?
		Kohl’s Corporation
		Return on Assets (ROA)
	Review
	Assess Your Progress
	Critical Thinking
Chapter 2 Recording Business Transactions
	What Is an Account?
		Assets
		Liabilities
		Equity
		Chart of Accounts
		Ledger
	What Is Double-Entry Accounting?
		The T-Account
		Increases and Decreases in the Accounts
		Expanding the Rules of Debit and Credit
		The Normal Balance of an Account
		Determining the Balance of a T-Account
	How Do You Record Transactions?
		Source Documents—The Origin of the Transactions
		Journalizing and Posting Transactions
		The Ledger Accounts After Posting
		The Four-Column Account: An Alternative to the T-Account
	What Is the Trial Balance?
		Preparing Financial Statements from the Trial Balance
		Correcting Trial Balance Errors
	How Do You Use the Debt Ratio to Evaluate Business Performance?
	Review
	Assess Your Progress
	Critical Thinking
Chapter 3 The Adjusting Process
	What Is the Difference Between Cash Basis Accounting and Accrual Basis Accounting?
	What Concepts and Principles Apply to Accrual Basis Accounting?
		The Time Period Concept
		The Revenue Recognition Principle
		The Matching Principle
	What Are Adjusting Entries, and How Do We Record Them?
		Deferred Expenses
		Accrued Expenses
		Accrued Revenues
	What Is the Purpose of the Adjusted Trial Balance, and How Do We Prepare It?
	What Is the Impact of Adjusting Entries on the Financial Statements?
	How Could a Worksheet Help in Preparing Adjusting Entries and the Adjusted Trial Balance?
	APPENDIX 3A: Alternative Treatment of Recording Deferred Expenses and Deferred Revenues
		What Is an Alternative Treatment of Recording Deferred Expenses and Deferred Revenues?
			Deferred Expenses
			Deferred Revenues
	Review
	Assess Your Progress
	Critical Thinking
Chapter 4 Completing the Accounting Cycle
	How Do We Prepare Financial Statements?
		Relationships Among the Financial Statements
		Classified Balance Sheet
	How Could a Worksheet Help in Preparing Financial Statements?
		Section 5—Income Statement
		Section 6—Balance Sheet
		Section 7—Determine Net Income or Net Loss
	What Is the Closing Process, and How Do We Close the Accounts?
		Closing Temporary Accounts—Net Income for the Period
		Closing Temporary Accounts—Net Loss for the Period
		Closing Temporary Accounts—Summary
	How Do We Prepare a Post-Closing Trial Balance?
	What Is the Accounting Cycle?
	How Do We Use the Current Ratio to Evaluate Business Performance?
	APPENDIX 4A: Reversing Entries: An Optional Step
		What Are Reversing Entries?
			Accounting for Accrued Expenses
			Accounting Without a Reversing Entry
			Accounting With a Reversing Entry
	Review
	Assess Your Progress
	Critical Thinking
	Comprehensive Problem 1 for Chapters 1–4
	Comprehensive Problem 2 for Chapters 1–4
Chapter 5 Merchandising Operations
	What Are Merchandising Operations?
		The Operating Cycle of a Merchandising Business
		Merchandise Inventory Systems: Perpetual and Periodic Inventory Systems
	How Are Purchases of Merchandise Inventory Recorded in a Perpetual Inventory System?
		Purchase of Merchandise Inventory
		Purchase Discounts
		Purchase Returns and Allowances
		Transportation Costs
		Cost of Inventory Purchased
	How Are Sales of Merchandise Inventory Recorded in a Perpetual Inventory System?
		Cash and Credit Card Sales
		Sales on Account
		Sales Discounts
		Sales Returns and Allowances
		Transportation Costs—Freight Out
	What Are the Adjusting and Closing Entries For a Merchandiser?
		Adjusting Merchandise Inventory Based on a Physical Count
		Closing the Accounts of a Merchandiser
	How Are a Merchandiser’s Financial Statements Prepared?
		Income Statement
		Statement of Retained Earnings and the Balance Sheet
	How Do We Use the Gross Profit Percentage to Evaluate Business Performance?
	APPENDIX 5A: Accounting for Multiple Peformance Obligations
		How Are Multiple Performance Obligations Recorded in a Perpetual Inventory System?
	APPENDIX 5B: Accounting for Merchandise Inventory in a Periodic Inventory System
		How Are Merchandise Inventory Transactions Recorded in a Periodic Inventory System?
			Purchases of Merchandise Inventory
			Sales of Merchandise Inventory
			Preparing Financial Statements
			Adjusting and Closing Entries
	Review
	Assess Your Progress
	Critical Thinking
Chapter 6 Merchandise Inventory
	What Are the Accounting Principles and Controls That Relate to Merchandise Inventory?
		Accounting Principles
		Control Over Merchandise Inventory
	How Are Merchandise Inventory Costs Determined Under a Perpetual Inventory System?
		Specific Identification Method
		First-In, First-Out (FIFO) Method
		Last-In, First-Out (LIFO) Method
		Weighted-Average Method
	How Are Financial Statements Affected by Using Different Inventory Costing Methods?
		Income Statement
		Balance Sheet
	How Is Merchandise Inventory Valued When Using the Lower-of-Cost-or-Market Rule?
		Computing the Lower-of-Cost-or-Market
		Recording the Adjusting Journal Entry to Adjust Merchandise Inventory
	What Are the Effects of Merchandise Inventory Errors on the Financial Statements?
	How Do We Use Inventory Turnover and Days’ Sales in Inventory to Evaluate Business Performance?
		Inventory Turnover
		Days’ Sales in Inventory
	APPENDIX 6A: Merchandise Inventory Costs Under a Periodic Inventory System
		How Are Merchandise Inventory Costs Determined Under a Periodic Inventory System?
			First-In, First-Out (FIFO) Method
			Last-In, First-Out (LIFO) Method
			Weighted-Average Method
	Review
	Assess Your Progress
	Critical Thinking
	Comprehensive Problem for Chapters 5 and 6
Chapter 7 Internal Control and Cash
	What Is Internal Control, and How Can It Be Used to Protect a Company’s Assets?
		Internal Control and the Sarbanes-Oxley Act
		The Components of Internal Control
		Internal Control Procedures
		The Limitations of Internal Control—Costs and Benefits
	What Are the Internal Control Procedures With Respect to Cash Receipts?
		Cash Receipts Over the Counter
		Cash Receipts by Mail
	What Are the Internal Control Procedures With Respect to Cash Payments?
		Controls Over Payment by Check
	How Can a Petty Cash Fund Be Used for Internal Control Purposes?
		Setting Up the Petty Cash Fund
		Replenishing the Petty Cash Fund
		Changing the Amount of the Petty Cash Fund
	How Are Credit Card Sales Recorded?
	How Can the Bank Account Be Used as a Control Device?
		Signature Card
		Deposit Ticket
		Check
		Bank Statement
		Electronic Funds Transfers
		Bank Reconciliation
		Examining a Bank Reconciliation
		Journalizing Transactions from the Bank Reconciliation
	How Can the Cash Ratio Be Used to Evaluate Business Performance?
	Review
	Assess Your Progress
	Critical Thinking
Chapter 8 Receivables
	What Are Common Types of Receivables, and How Are Credit Sales Recorded?
		Types of Receivables
		Exercising Internal Control Over Receivables
		Recording Sales on Credit
		Decreasing Collection Time and Credit Risk
	How Are Uncollectibles Accounted for When Using the Direct Write-Off Method?
		Recording and Writing Off Uncollectible Accounts—Direct
Write-off Method
		Recovery of Accounts Previously Written Off—Direct
Write-off Method
		Limitations of the Direct Write-off Method
	How Are Uncollectibles Accounted For When Using the Allowance Method?
		Recording Bad Debts Expense—Allowance Method
		Writing Off Uncollectible Accounts—Allowance Method
		Recovery of Accounts Previously Written Off—Allowance Method
		Estimating and Recording Bad Debts Expense—Allowance Method
		Comparison of Accounting for Uncollectibles
	How Are Notes Receivable Accounted For?
		Identifying Maturity Date
		Computing Interest on a Note
		Accruing Interest Revenue and Recording Honored Notes Receivable
		Recording Dishonored Notes Receivable
	How Do We Use the Acid-Test Ratio, Accounts Receivable Turnover Ratio, and Days’ Sales in Receivables to Evaluate Business Performance?
		Acid-Test (or Quick) Ratio
		Accounts Receivable Turnover Ratio
		Days’ Sales in Receivables
	Review
	Assess Your Progress
	Critical Thinking
Chapter 9 Plant Assets, Natural Resources, and Intangibles
	How Does a Business Measure the Cost of Property, Plant, and Equipment?
		Land and Land Improvements
		Buildings
		Machinery and Equipment
		Furniture and Fixtures
		Lump-Sum Purchase
		Capital and Revenue Expenditures
	What Is Depreciation, and How Is It Computed?
		Factors in Computing Depreciation
		Depreciation Methods
		Partial-Year Depreciation
		Changing Estimates of a Depreciable Asset
		Reporting Property, Plant, and Equipment
	How Are Disposals of Plant Assets Recorded?
		Discarding Plant Assets
		Selling Plant Assets
	How Are Natural Resources Accounted For?
	How Are Intangible Assets Accounted For?
		Accounting for Intangibles
		Specific Intangibles
		Reporting of Intangible Assets
	How Do We Use the Asset Turnover Ratio to Evaluate Business Performance?
	APPENDIX 9A: Exchanging Plant Assets
		How Are Exchanges of Plant Assets Accounted For?
			Exchange of Plant Assets–Gain Situation
			Exchange of Plant Assets–Loss Situation
	Review
	Assess Your Progress
	Critical Thinking
	Comprehensive Problem for Chapters 7, 8, and 9
Chapter 10 Investments
	Why Do Companies Invest?
		Debt Securities Versus Equity Securities
		Reasons to Invest
		Classification and Reporting of Investments
	How Are Investments in Debt Securities Accounted For?
		Purchase of Debt Securities
		Interest Revenue
		Disposition at Maturity
	How Are Investments in Equity Securities Accounted For?
		Equity Securities with No Significant Influence
		Equity Securities with Significant Influence (Equity Method)
		Equity Securities with Control (Consolidations)
	How Are Debt and Equity Securities Reported?
		Trading Debt Investments
		Available-for-Sale Debt Investments
		Held-to-Maturity Debt Investments
		Equity Investments with No Significant Influence
	How Do We Use the Rate of Return on Total Assets to Evaluate Business Performance?
	Review
	Assess Your Progress
	Critical Thinking
Chapter 11 Current Liabilities and Payroll
	How Are Current Liabilities of Known Amounts Accounted For?
		Accounts Payable
		Sales Tax Payable
		Income Tax Payable
		Unearned Revenues
		Short-term Notes Payable
		Current Portion of Long-term Notes Payable
	How Do Companies Account For and Record Payroll?
		Gross Pay and Net (Take‐Home) Pay
		Employee Payroll Withholding Deductions
		Payroll Register
		Journalizing Employee Payroll
		Employer Payroll Taxes
		Payment of Employer Payroll Taxes and Employees’ Withholdings
		Internal Control Over Payroll
	How Are Current Liabilities That Must Be Estimated Accounted For?
		Bonus Plans
		Vacation, Health, and Pension Benefits
		Warranties
	How Are Contingent Liabilities Accounted For?
		Remote Contingent Liability
		Reasonably Possible Contingent Liability
		Probable Contingent Liability
	How Do We Use the Times-Interest-Earned Ratio to Evaluate Business Performance?
	Review
	Assess Your Progress
	Critical Thinking
Chapter
12  Long-Term Liabilities
	How Are Long-Term Notes Payable and Mortgages Payable Accounted For?
		Long-term Notes Payable
		Mortgages Payable
	What Are Bonds?
		Types of Bonds
		Bond Prices
		Present Value and Future Value
		Bond Interest Rates
		Issuing Bonds Versus Issuing Stock
	How Are Bonds Payable Accounted For Using the Straight-Line Amortization Method?
		Issuing Bonds Payable at Face Value
		Issuing Bonds Payable at a Discount
		Issuing Bonds Payable at a Premium
	How Is the Retirement of Bonds Payable Accounted For?
		Retirement of Bonds at Maturity
		Retirement of Bonds Before Maturity
	How Are Liabilities Reported On the Balance Sheet?
	How Do We Use the Debt to Equity Ratio to Evaluate Business Performance?
	APPENDIX 12A: The Time Value of Money
		What Is the Time Value of Money, and How Is Present Value and Future Value Calculated?
			Time Value of Money Concepts
			Present Value of a Lump Sum
			Present Value of an Annuity
			Present Value of Bonds Payable
			Future Value of a Lump Sum
			Future Value of an Annuity
	APPENDIX 12B: Effective-Interest Method of Amortization
		How Are Bonds Payable Accounted For Using the Effective-Interest Amortization Method?
			Effective-Interest Amortization for a Bond Discount
			Effective-Interest Amortization of a Bond Premium
	Review
	Assess Your Progress
	Critical Thinking
Chapter 13 Stockholders’ Equity
	What Is A Corporation?
		Characteristics of Corporations
		Stockholders’ Equity Basics
	How Is the Issuance of Stock Accounted For?
		Issuing Common Stock at Par Value
		Issuing Common Stock at a Premium
		Issuing No-Par Common Stock
		Issuing Stated Value Common Stock
		Issuing Common Stock for Assets Other Than Cash
		Issuing Preferred Stock
	How Is Treasury Stock Accounted For?
		Treasury Stock Basics
		Purchase of Treasury Stock
		Sale of Treasury Stock
		Retirement of Stock
	How Are Dividends and Stock Splits Accounted For?
		Cash Dividends
		Stock Dividends
		Cash Dividends, Stock Dividends, and Stock Splits Compared
	How Is the Complete Corporate Income Statement Prepared?
		Continuing Operations
		Discontinued Operations
		Earnings per Share
	How Is Equity Reported For a Corporation?
		Statement of Retained Earnings
		Statement of Stockholders’ Equity
	How Do We Use Stockholders’ Equity Ratios to Evaluate Business Performance?
		Earnings per Share
		Price/Earnings Ratio
		Rate of Return on Common Stockholders’ Equity
	Review
	Assess Your Progress
	Critical Thinking
	Comprehensive Problem for Chapters 11, 12, and 13
Chapter 14 The Statement of Cash Flows
	What Is the Statement of Cash Flows?
		Purpose of the Statement of Cash Flows
		Classification of Cash Flows
		Two Formats for Operating Activities
	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
		Non-cash Investing and Financing Activities
	How Do We Use Free Cash Flow to Evaluate Business Performance?
	APPENDIX 14A: Preparing the Statement of Cash Flows by the Direct Method
		How Is the Statement of Cash Flows Prepared Using the Direct Method?
			Cash Flows from Operating Activities
	APPENDIX 14B: Preparing the Indirect Statement of Cash Flows Using a Spreadsheet
		How Is the Statement of Cash Flows Prepared Using the Indirect Method And a Spreadsheet?
	Review
	Assess Your Progress
	Critical Thinking
Chapter 15 Financial Statement Analysis
	How Are Financial Statements Used to Analyze a Business?
		Purpose of Analysis
		Tools of Analysis
		Corporate Financial Reports
	How Do We Use Horizontal Analysis to Analyze a Business?
		Horizontal Analysis of the Income Statement
		Horizontal Analysis of the Balance Sheet
		Trend Analysis
	How Do We Use Vertical Analysis to Analyze a Business?
		Vertical Analysis of the Income Statement
		Vertical Analysis of the Balance Sheet
		Common-Size Statements
		Benchmarking
	How Do We Use Ratios to Analyze a Business?
		Evaluating the Ability to Pay Current Liabilities
		Evaluating the Ability to Sell Merchandise Inventory and Collect Receivables
		Evaluating the Ability to Pay Long-term Debt
		Evaluating Profitability
		Evaluating Stock as an Investment
		Red Flags in Financial Statement Analyses
	Review
	Assess Your Progress
	Critical Thinking
Appendix A— Present Value Tables and Future Value Tables
Appendix B— Accounting Information Systems
Glossary
Index
Photo Credits