INTRODUCTORY FINANCIAL ACCOUNTING FOR BUSINESS

Cover
Title Page
Copyright Page
Dedication
About The Authors
Acknowledgments
Brief Contents
Contents
Chapter 1 An Introduction to Accounting
	SECTION 1: Collecting and Organizing Information
	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
	Creating an Accounting Equation
	Types of Transactions
	Recording Business Events under the Accounting Equation
		Asset Source Transactions
		Asset Exchange Transactions
		Another Asset Source Transaction
		Asset Use Transactions
		Summary of Transactions
	Preparing a Balance Sheet
		Second Accounting Cycle
		Interpreting Information Shown in a Balance Sheet
		Two Views of the Liabilities and Stockholders’ Equity Sections of the Balance Sheet
	SECTION 2: Reporting Information
	Preparing an Income Statement
		Income Statement and the Matching Concept
	Statement of Changes in Stockholders’ Equity
	Preparing a Statement of Cash Flows
	Financial Statement Articulation
	The Financial Analyst
		Reporting Order
		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
	Section 1 Exercises–Series A
	Section 2 Exercises–Series A
	Sections 1 and 2 Problems–Series A
	Section 1 Exercises–Series B
	Section 2 Exercises–Series B
	Sections 1 and 2 Problems–Series B
	Analyze, Think,Communicate
Chapter 2 Accounting for Accruals
	Chapter Opening
	The Horizontal Financial Statements Model
	Accounting for Receivables
	Accounting for Accounts Receivable
		Other Events
	Accounting for Payables
		Summary of Events and Their Effects on the Accounting Equation
	Preparing Financial Statements
		Balance Sheet
		Income Statement
		Statement of Changes in Stockholders’ Equity
		Statement of Cash Flows
		Comparing Cash Flow from Operating Activities with Net Income
		The Matching Concept
	Accounting for Notes Payable
		Accounting Events for Notes Payable at Maturity Date
	Causal Factors for Changes in Account Balances
	The Financial Analyst
	Corporate Governance
		Importance of Ethics
		The Sarbanes–Oxley Act
		Common Features of Criminal and Ethical Misconduct
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises–Series A
	Problems–Series A
	Exercises–Series B
	Problems–Series B
	Analyze, Think, Communicate
Chapter 3 Accounting for Deferrals
	Chapter Opening
	Alvarado Advisory Services Illustration for Year 1
	Accounting for Supplies
	Accounting for Prepaid Items
	Accounting for Unearned Revenue
	Prepare Financial Statements
		Deferral Accounts on the Balance Sheet
		Comparing the Income Statement with the Statement of Cash Flows
	Alvarado Advisory Services Illustration for Year 2
	Accounting for Depreciation
		Other Year 2 Events
	Prepare Financial Statements
		Effect of Depreciation on Financial Statements
	The Financial Analyst
		Assessing the Effective Use of Assets
		Assessing Debt Risk
		Real-World Data
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 4 Accounting for Merchandising Businesses
	Chapter Opening
	Accounting for Inventory Transactions
		Allocating Inventory Cost between Asset and Expense Accounts
		Perpetual Inventory System
		Effects of Year 1 Events on Financial Statements
		Financial Statements for Year 1
	Transportation Cost, Purchase Returns and Allowances, and Cash Discounts Related to Inventory Purchases
		Effects of the Year 2 Events on Financial Statements
	Accounting for Purchase Returns and Allowances
	Purchase Discounts
		The Cost of Financing Inventory
	Accounting for Transportation Costs
		FOB Shipping Point
		FOB Destination
	Adjustment for Lost, Damaged, or Stolen Inventory
	Gains, Losses, and a Multistep Income Statement
	Events Affecting Sales
		Accounting for Sales Returns and Allowances
		Accounting for Sales Discounts
	The Financial Analyst
		Common Size Financial Statements
		Ratio Analysis
		Real-World Data
	A Look Back
	A Look Forward
	Appendix
		Periodic Inventory System
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 5 Accounting for Inventories
	Chapter Opening
	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
		Multiple Layers with Multiple Quantities
		Allocating Cost of Goods Available for Sale
		Financial Statements
		Multiple Layers
		Inventory Cost Flow When Sales and Purchases Occur Intermittently
	Lower-of-Cost-or-Market Rule
	Avoiding Fraud in Merchandising Businesses
	Estimating the Ending Inventory Balance
	The Financial Analyst
		Average Number of Days to Sell Inventory
		Is It a Marketing or an Accounting Decision?
		The Wallet Company Illustration
		Real-World Data
		Effects of Cost Flow on Ratio Analysis
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 6 Internal Control and Accounting for Cash
	Chapter Opening
	Key Features of Internal Control Systems
		Segregation 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
		Adjustments to the Bank Balance
		Adjustments to the Book Balance
		Correction of Errors
		Certified Checks
		Illustrating a Bank Reconciliation
		Updating GSRI’s Accounting Records
		Cash Short and Over
	Using Petty Cash Funds
		Establishing a Petty Cash Fund
		Disbursing Petty Cash Funds
		Recognizing Petty Cash Expenses
		Replenishing the Petty Cash Fund
		Alternative Approach to Petty Cash Expense Recognition and Replenishment
	The Financial Analyst
		Notes to the Financial Statements
		Management’s Discussion and Analysis
		Role of the Independent Auditor
		The Securities and Exchange Commission
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 7 Accounting for Receivables
	Chapter Opening
	Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
		Accounting Events Affecting the Year 1 Period
		Analysis of the Year 1 Financial Statements
		Accounting Events Affecting the Year 2 Period
		Analysis of the Year 2 Financial Statements
	Estimating Uncollectible Accounts Expense Using the Percent of Receivables Method
		Aging Accounts Receivable
		Matching Revenues and Expenses versus Asset Measurement
	Recognizing Uncollectible Accounts Expense Using the Direct Write-Off Method
	Accounting for Notes Receivable
		Reporting Transactions Related to Notes Receivable
		Financial Statements
	Accounting for Credit Card Sales
	The Financial Analyst
		Average Number of Days to Collect Accounts Receivable
		Real-World Data
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 8 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
		Effects on the Financial Statements
	Units-of-Production Depreciation
	Accounting for the Disposal of Long-Term Operational Assets
		Comparing the Depreciation Methods
	Income Tax Considerations
	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
		Balance Sheet Presentation
	The Financial Analyst
		Effect of Judgment and Estimation
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 9 Accounting for Current Liabilities and Payroll
	Chapter Opening
	Accounting for Notes Payable
	Accounting for Sales Tax
	Contingent Liabilities
	Warranty Obligations
		Financial Statements
	Accounting for Payroll
		Identifying Employees
		Employees’ Gross Earnings
		Deductions from Employees’ Gross Earnings
		Federal Income Taxes
		Federal Income Tax Documents
		Social Security and Medicare Taxes (FICA)
		Voluntary Withholdings (Deductions)
		Computing Employee Net Pay
		Employer Payroll Taxes
		Recording and Reporting Payroll Taxes
		Employee Fringe Benefits
	The Financial Analyst
		Preparing a Classified Balance Sheet
		Liquidity versus Solvency
		Real-World Data
	A Look Back
	A Look Forward
	Appendix
		Accounting for Discount Notes
		Accounting Events Affecting Year 2
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 10 Accounting for Long-Term Debt
	Chapter Opening
	Installment Notes Payable
	Line of Credit
	Bond Liabilities
		Advantages of Issuing Bonds
		Security of Bonds
		Timing of Maturity
		Special Features
		Bond Ratings
		Restrictive Covenants
		Bonds Issued at Face Value
		Financial Statement Effects
		Financial Statements
	Amortization Using the Straight-Line Method
		Bonds Issued at a Discount
		Bonds Issued at a Premium
		Bond Redemptions
	Amortization Using the Effective Interest Rate Method
		Amortizing Bond Discounts
		Amortizing Bond Premiums
	The Financial Analyst
		Financial Leverage and Tax Advantage of Debt Financing
		EBIT and Ratio Analysis
		Times-Interest-Earned Ratio
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 11 Proprietorships, Partnerships, and Corporations
	Chapter Opening
	Forms of Business Organizations
		Regulation
		Double Taxation
		Limited Liability
		Continuity
		Transferability of Ownership
		Management Structure
		Ability to Raise Capital
		Appearance of Capital Structure in Financial Statements
	Accounting for Capital Stock
		Par Value
		Stated Value
		Stock: Authorized, Issued, and Outstanding
		Other Valuation Terminology
	Common versus Preferred Stock
		Common Stock
		Preferred Stock
		Other 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
	Treasury Stock
	Cash Dividends
		Declaration Date
		Date of Record
		Payment Date
	Stock Dividends and Splits
		Stock Dividends
		Stock Splits
	Appropriation of Retained Earnings
		Financial Statement Presentation
	The Financial Analyst
	Stock Investment Decisions
		Receiving Dividends
		Increasing the Price of Stock
		Price-Earnings Ratio
		Exercising Control through Stock Ownership
	Business Liquidations
		Business Liquidations Resulting from Net Losses
		Business Liquidations Resulting from the Mismanagement of Assets
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 12 Statement of Cash Flows
	Chapter Opening
	An Overview of the Statement of Cash Flows
		Operating Activities
		Investing Activities
		Financing Activities
		Noncash Investing and Financing Activities
		Reporting Format for the Statement of Cash Flows
	Preparing a Statement of Cash Flows
	Preparing the Operating Activities Section of a Statement of Cash Flows Using the Indirect Method
		Indirect Method—Reconciliation Approach
		Indirect Method—Rule-Based Approach
	Preparing the Operating Activities Section of a Statement of Cash Flows Using the Direct Method
	Preparing the Investing Activities Section of a Statement of Cash Flows
		Reconciliation of Investment Securities
		Reconciliation of Store Fixtures
		Reconciliation of Land
	Preparing the Financing Activities Section of a Statement of Cash Flows
		Reconciliation of Mortgage Payable
		Reconciliation of Bonds Payable
		Reconciliation of Common Stock
		Reconciliation of Retained Earnings
		Reconciliation of Treasury Stock
	Preparing the Schedule of Noncash Investing and Financing Activities
	The Financial Analyst
		Real-World Data
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Chapter 13 The Double-Entry Accounting System
	Chapter Opening
	Debit/Credit Terminology
		Rules for Debits and Credits
	Recording Transactions in T-Accounts
		Asset Source Transactions
		Asset Exchange Transactions
		Asset Use Transactions
		Claims Exchange Transactions
		Adjusting the Accounts
	The General Journal
	Trial Balance and Financial Statements
	Permanent versus Temporary Accounts
		Closing Entries
		Post-Closing Trial Balance
	Recording Debits and Credits in T-Accounts for Other Events
		T-Account Entries for the Purchase and Sale of Merchandise Inventory
		T-Account Entries for Long-Term Assets and Depreciation
		Journal Entries for Notes Payable and Interest Expense
		General Ledger and Adjusted Trial Balance
		Adjusted Trial Balance
		Financial Statements
		Closing Entries
	A Look Back
	A Look Forward
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
Chapter 14 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
		Objectives of Ratio Analysis
	Measures of Debt-Paying Ability
		Liquidity Ratios
		Solvency Ratios
	Measures of Profitability
		Measures of Managerial Effectiveness
		Stock Market Ratios
	Limitations of Financial Statement Analysis
		Different Industries
		Changing Economic Environment
		Accounting Principles
	A Look Back
	Self-Study Review Problem
	Key Terms
	Questions
	Exercises—Series A
	Problems—Series A
	Exercises—Series B
	Problems—Series B
	Analyze, Think, Communicate
Appendix A Accessing the EDGAR Database through the Internet
Appendix B Portion of the Form 10-K for Target Corporation
Appendix C Summary of Financial Ratios
Appendix D General Ledger Capstone Project
Appendix E Capstone Financial Statement Analysis and Annual Report Projects
Appendix F Accounting for Investment Securities
Appendix G Time Value of Money
Appendix H Big Data and Data Visualizations Overview
Appendix I Chart of Accounts
Glossary
Index