Preface ix
Chapter 1 Basic Financial Accounting Concepts 1
Learning Objectives 1
Accounting as the Language of Business 2
Objectives of Financial Reporting 4
Basic Accounting Concepts 5
The Basic Financial Statements 8
Using Financial Statement Information 17
Review Questions 18
Practice Multiple Choice Questions 21
Chapter 2 The Accounting Cycle 24
Learning Objectives 24
Transaction Analysis 26
The Accounting Cycle 29
Summary of the Seven Types of Accounts 30
The Rules for Debits and Credits 30
The Chart of Accounts 32
Cash Basis versus Accrual Basis 33
The Journal Entry 33
Recording Journal Entries 38
Posting to the Ledger 40
The Trial Balance 41
Adjusting Entries 41
The Closing Process 45
Balancing the Permanent Accounts 47
Correcting Errors 47
Preparing the Financial Statements 48
Comprehensive Illustration 49
Review Questions 59
Practice Multiple Choice Questions 61
Chapter 3 Internal Controls, Cash, and Receivables 64
Learning Objectives 64
The Sarbanes-Oxley Act Requirements 65
Sarbanes-Oxley and Internal Control 66
Reporting Cash 68
The Bank Reconciliation 70
Accounts Receivable 73
Notes Receivable 77
Getting Cash for Receivables 78
Summary of Journal Entries 79
Review Questions 80
Practice Multiple Choice Questions 83
Chapter 4 Inventory 85
Learning Objectives 85
Basic Inventory Issues 86
Purchasing and Selling Inventory 89
The Cost of Goods Sold Model 91
The Periodic Method versus the Perpetual Method 92
Taking Inventory and the Cost Flow Assumptions 95
Lower of Cost or Market (LCM) 102
Impact of Inventory Errors 104
Review Questions 107
Practice Multiple Choice Questions 109
Chapter 5 Noncurrent Assets and Depreciation 113
Learning Objectives 113
Noncurrent Assets 114
Long-Term Investments 114
Property, Plant, and Equipment 116
Declining-Balance Method 121
Depreciation Conventions 123
Intangible Assets 126
Impairment 129
Accounting for Research and Development 131
Summary of Journal Entries 132
Review Questions 133
Practice Multiple Choice Questions 135
Chapter 6 Current and Noncurrent Liablities 139
Learning Objectives 139
Liabilities 140
Current Liabilities 140
Long-Term Liabilities 147
Summary of Journal Entries 154
Review Questions 155
Practice Multiple Choice Questions 158
Chapter 7 Stockholders' Equity 160
Learning Objectives 160
Stockholders' Equity 162
Summary of Journal Entries 173
Review Questions 174
Practice Multiple Choice Questions 176
Chapter 8 the Statement of Cash Flows 178
Learning Objectives 178
Objectives of the Statement of Cash Flows 179
Format of the Statement of Cash Flows 180
A Step-by-Step Approach to Solving Statement of Cash Flows Problems 182
Review Questions 202
Practice Multiple Choice Questions 203
Chapter 9 Review of Financial Statements and Financial Statement Analysis 205
Learning Objectives 205
Horizontal and Vertical Analysis 206
DuPont Method 207
Financial Ratio Analysis 208
Review Questions 217
Practice Multiple Choice Questions 218
Appendix A Basic College Skills 221
Learning Objectives 221
College Skills 222
Appendix B the Time Value of Money 239
Learning Objectives 239
Introduction 239
Basic Concepts 239
Making Present Value and Future Value Calculations: A Summary 245
Practice Multiple Choice Questions 260
Appendix C Gross Profit Inventory Computation 262
The Gross Profit Method 262
Appendix D Advanced Topics for Chapter Five: Capitalization Of Interest and Nonmonetary Exchanges 266
Capitalization of Interest on Self-Constructed Assets 266
Nonmonetary Exchanges 268
Appendix E The Cpa and the Auditor's Report 272
Introduction 272
Generally Accepted Auditing Standards 273
Glossary 277
Index 299
