Table of Contents
Chapter 1: Why Is Financial Accounting Important?
Making Good Financial Decisions about an Organization
Incorporation and the Trading of Capital Shares
Using Financial Accounting for Wise Decision Making
Chapter 2: What Should Decision-makers Know So That Good Decisions Can Be Made about an Organization?
Creating a Portrait of an Organization That Can Be Used by Decision Makers
Dealing with Uncertainty
The Need for Generally Accepted Accounting Principles
Four Basic Terms Found in Financial Accounting
Chapter 3: In What Form Is Financial Information Actually Delivered to Decision Makers Such as Investors and Creditors?
The Construction of an Income Statement
Reported Profitability and the Principle of Conservatism
Increasing the Net Assets of a Company
Reporting a Balance Sheet and a Statement of Cash Flows
Chapter 4: How Does an Organization Accumulate and Organize the Information Necessary to Prepare Financial Statements?
The Essential Role of Transaction Analysis
The Effects Caused by Common Transactions
An Introduction to Double-Entry Bookkeeping
Preparing Journal Entries
The Connection of the Journal and the Ledger
Chapter 5: Why Must Financial Information Be Adjusted Prior to the Production of Financial Statements?
The Need for Adjusting Entries
Preparing Various Adjusting Entries
Preparing Financial Statements Based on Adjusted Balances
Chapter 6: Why Should Decision Makers Trust Financial Statements?
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
Chapter 7: In a Set of Financial Statements, What Information Is Conveyed about Receivables?
Accounts Receivable and Net Realizable Value
Accounting for Uncollectible Accounts
The Problem with Estimations
Estimating the Amount of Uncollectible Accounts
Remeasuring Foreign Currency Balances
A Company’s Vital Signs—Accounts Receivable
Chapter 8: How Does a Company Gather Information about Its Inventory?
Determining and Reporting the Cost of Inventory
Perpetual and Periodic Inventory Systems
The Calculation of Cost of Goods Sold
Reporting Inventory at the Lower-of-Cost-or-Market
Determining Inventory on Hand
Chapter 9: Why Does a Company Need a Cost Flow Assumption in Reporting Inventory?
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
Chapter 10: In a Set of Financial Statements, What Information Is Conveyed about Property and Equipment?
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
Chapter 11: In a Set of Financial Statements, What Information Is Conveyed about Intangible Assets?
Identifying and Accounting for Intangible Assets
The 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
Chapter 12: In a Set of Financial Statements, What Information Is Conveyed about Equity Investments?
Accounting for Investments in Trading Securities
Accounting for Investments in Securities That Are Available for Sale
Accounting for Investments by Means of the Equity Method
The Reporting of Consolidated Financial Statements
Chapter 13: In a Set of Financial Statements, What Information Is Conveyed about Current and Contingent Liabilities?
Basic Reporting of Liabilities
Reporting Current Liabilities Such as Gift Cards
Accounting for Contingencies
Accounting for Product Warranties
Chapter 14: In a Set of Financial Statements, What Information Is Conveyed about Noncurrent Liabilities Such as Bonds?
The 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
Chapter 15: In Financial Statements, What Information Is Conveyed about Other Noncurrent Liabilities?
Accounting for Leases
Operating Leases versus Capital Leases
Recognition of Deferred Income Taxes
Reporting Postretirement Benefits
Chapter 16: In a Set of Financial Statements, What Information Is Conveyed about Shareholders’ Equity?
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
Chapter 17: In a Set of Financial Statements, What Information Is Conveyed by the Statement of Cash Flows?
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: Present Value Tables