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Business Accounting

Table of Contents

• About the Authors

• Acknowledgments

• Preface

• Chapter 1: What Is Financial Accounting, and Why Is It Important?

  • Chapter Introduction
  • Making Good Financial Decisions about an Organization
  • Incorporation and the Trading of Capital Shares
  • Using Financial Accounting for Wise Decision Making
  • End-of-Chapter Exercises

• Chapter 2: What Should Decision Makers Know in Order to Make Good Decisions about an Organization?

  • Chapter Introduction
  • Creating a Portrait of an Organization That Can Be Used by Decision Makers
  • Dealing with Uncertainty
  • The Need for Accounting Standards
  • Four Essential Terms Encountered in Financial Accounting
  • End-of-Chapter Exercises

• Chapter 3: How Is Financial Information Delivered to Decision Makers Such as Investors and Creditors?

  • Chapter Introduction
  • Construction of Financial Statements Beginning with the Income Statement
  • Reported Profitability and the Impact of Conservatism
  • Increasing the Net Assets of a Company
  • Reporting a Balance Sheet and a Statement of Cash Flows
  • End-of-Chapter Exercises

• Chapter 4: How Does an Organization Accumulate and Organize the Information Necessary to Create Financial Statements?

  • Chapter Introduction
  • The Essential Role of Transaction Analysis
  • Understanding the Effects Caused by Common Transactions
  • Double-Entry Bookkeeping
  • Recording Transactions Using Journal Entries
  • Connecting the Journal to the Ledger
  • End-of-Chapter Exercises

• Chapter 5: Why Is Financial Information Adjusted Prior to the Production of Financial Statements?

  • Chapter Introduction
  • The Need for Adjusting Entries
  • Preparing Various Adjusting Entries
  • Preparation of Financial Statements
  • End-of-Chapter Exercises

• Chapter 6: Why Should Decision Makers Trust Financial Statements?

  • Chapter Introduction
  • The Need for the Securities and Exchange Commission
  • The Role of the Independent Auditor in Financial Reporting
  • Performing an Audit
  • The Need for Internal Control
  • The Purpose and Content of an Independent Auditor’s Report
  • End-of-Chapter Exercises

• Chapter 7: In Financial Reporting, What Information Is Conveyed about Receivables?

  • Chapter Introduction
  • Accounts Receivable and Net Realizable Value
  • Accounting for Uncollectible Accounts
  • The Problem with Estimations
  • The Actual Estimation of Uncollectible Accounts
  • Reporting Foreign Currency Balances
  • A Company’s Vital Signs—Accounts Receivable
  • End-of-Chapter Exercises

• Chapter 8: How Does a Company Gather Information about Its Inventory?

  • Chapter Introduction
  • Determining and Reporting the Cost of Inventory
  • Perpetual and Periodic Inventory Systems
  • The Calculation of Cost of Goods Sold
  • Reporting Inventory at Lower of Cost or Market
  • Determining Inventory on Hand
  • End-of-Chapter Exercises

• Chapter 9: Why Does a Company Need a Cost Flow Assumption in Reporting Inventory?

  • Chapter Introduction
  • The Necessity of Adopting a Cost Flow Assumption
  • The Selection of a Cost Flow Assumption for Reporting Purposes
  • Problems with Applying LIFO
  • Merging Periodic and Perpetual Inventory Systems with a Cost Flow Assumption
  • Applying LIFO and Averaging to Determine Reported Inventory Balances
  • Analyzing Reported Inventory Figures
  • End-of-Chapter Exercises

• Chapter 10: In a Set of Financial Statements, What Information Is Conveyed about Property and Equipment?

  • Chapter Introduction
  • The Reporting of Property and Equipment
  • Determining Historical Cost and Depreciation Expense
  • Recording Depreciation Expense for a Partial Year
  • Alternative Depreciation Patterns and the Recording of a Wasting Asset
  • Recording Asset Exchanges and Expenditures That Affect Older Assets
  • Reporting Land Improvements and Impairments in the Value of Property and Equipment
  • End-of-Chapter Exercises

• Chapter 11: In a Set of Financial Statements, What Information Is Conveyed about Intangible Assets?

  • Chapter Introduction
  • Identifying and Accounting for Intangible Assets
  • Balance Sheet Reporting of Intangible Assets
  • Recognizing Intangible Assets Owned by a Subsidiary
  • Accounting for Research and Development
  • Acquiring an Asset with Future Cash Payments
  • End-of-Chapter Exercises

• Chapter 12: In a Set of Financial Statements, What Information Is Conveyed about Equity Investments?

  • Chapter Introduction
  • Accounting for Investments in Trading Securities
  • Accounting for Investments in Securities That Are Classified as Available-for-Sale
  • Accounting for Investments by Means of the Equity Method
  • Reporting Consolidated Financial Statements
  • End-of-Chapter Exercises

• Chapter 13: In a Set of Financial Statements, What Information Is Conveyed about Current and Contingent Liabilities?

  • Chapter Introduction
  • The Basic Reporting of Liabilities
  • Reporting Current Liabilities Such as Gift Cards
  • Accounting for Contingencies
  • Accounting for Product Warranties
  • End-of-Chapter Exercises

• Chapter 14: In a Set of Financial Statements, What Information Is Conveyed about Noncurrent Liabilities Such as Bonds?

  • Chapter Introduction
  • Debt Financing
  • Issuance of Notes and Bonds
  • Accounting for Zero-Coupon Bonds
  • Pricing and Reporting Term Bonds
  • Issuing and Accounting for Serial Bonds
  • Bonds with Other Than Annual Interest Payments
  • End-of-Chapter Exercises

• Chapter 15: In a Set of Financial Statements, What Information Is Conveyed about Other Noncurrent Liabilities?

  • Chapter Introduction
  • Accounting for Leases
  • Operating Leases versus Capital Leases
  • Recognition of Deferred Income Taxes
  • Reporting Postretirement Benefits
  • End-of-Chapter Exercises

• Chapter 16: In a Set of Financial Statements, What Information Is Conveyed about Shareholders’ Equity?

  • Chapter Introduction
  • Selecting a Legal Form for a Business
  • The Issuance of Common Stock
  • Issuing and Accounting for Preferred Stock and Treasury Stock
  • The Issuance of Cash and Stock Dividends
  • The Computation of Earnings per Share
  • End-of-Chapter Exercises

• Chapter 17: In a Set of Financial Statements, What Information Is Conveyed by the Statement of Cash Flows?

  • Chapter Introduction
  • The Structure of a Statement of Cash Flows
  • Cash Flows from Operating Activities: The Direct Method
  • Cash Flows from Operating Activities: The Indirect Method
  • Cash Flows from Investing and Financing Activities
  • Appendix: Comprehensive Illustration—Statement of Cash Flows
  • End-of-Chapter Exercises

• Appendix: Present Value Tables