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Test Bank for Financial Accounting: Global Edition: International Financial Reporting Standards

By: Walter T.; Horngren, Charles T.; Thomas, C. William; Suwardy, Themi Harrison Jr
ISBN-10: 0273777807
/ ISBN-13: 9780273777809

Study Guide Details

Format: Downloadable ZIP Fille
Authors: Walter T.; Horngren, Charles T.; Thomas, C. William; Suwardy, Themi Harrison Jr
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Description

Table of content:

Contents
“I get it!”
Hallmark Features
New to the Ninth Edition
Students Will “Get It” Anytime, Anywhere with the Student Learning System!
Student Resources
Instructor Resources
Acknowledgments
Accounting Careers: Much More Than Counting Things
1 Conceptual Framework and Financial Statements
SPOTLIGHT: Samsung Electronics
BUSINESS DECISIONS
ACCOUNTING IS THE LANGUAGE OF BUSINESS
Two Perspectives of Accounting: Financial Accounting and Management Accounting
Organizing a Business
Accounting Standards
THE CONCEPTUAL FRAMEWORK
Why is Financial Reporting Important?
Who are the Users of Accounting Information?
What Makes Accounting Information Useful?
What Constraints do We Face in Providing Useful Information?
What are Our Assumptions in Financial Reporting?
What Exactly are We Accounting for?
THE ACCOUNTING EQUATIONS
FINANCIAL STATEMENTS
The Income Statement Shows a Company’s Financial Performance
The Statement of Changes in Equity Shows a Company’s Transactions with its Owners
The Balance Sheet Shows a Company’s Financial Position
THE STATEMENT OF CASH FLOWS SHOWS A COMPANY’S CASH RECEIPTS AND PAYMENTS
RELATIONSHIPS AMONG THE FINANCIAL STATEMENTS
ETHICS IN BUSINESS AND ACCOUNTING DECISIONS
END-OF-CHAPTER SUMMARY PROBLEM
Demo Doc
2 Recording Business Transactions
SPOTLIGHT: De Beers
TRANSACTIONS
KEEPING TRACK OF FINANCIAL STATEMENT ITEMS
Assets
Liabilities
Equity
ACCOUNTING FOR BUSINESS TRANSACTIONS
Transactions and Financial Statements
MID-CHAPTER SUMMARY PROBLEM
DOUBLE-ENTRY ACCOUNTING
The T-Account
Increases and Decreases in the Accounts: The Rules of Debit and Credit
Additional Shareholders’ Equity Accounts: Income and Expenses
RECORDING TRANSACTIONS
Copying Information (Posting) from the Journal to the Ledger
The Flow of Accounting Data
Accounts After Posting to the Ledger
THE TRIAL BALANCE
Analyzing Accounts
Correcting Accounting Errors
Chart of Accounts
The Normal Balance of an Account
Account Formats
Analyzing Transactions Using Only T-Accounts
END-OF-CHAPTER SUMMARY PROBLEM
Demo Doc
3 Accrual Accounting
SPOTLIGHT: Richemont
ACCRUAL ACCOUNTING VERSUS CASH BASIS ACCOUNTING
Accrual Accounting and Cash Flows
The Time-Period Concept
The Revenue Recognition Principle
The Matching Concept
ETHICS IN BUSINESS AND ACCOUNTING DECISIONS
MID-CHAPTER SUMMARY PROBLEM
UPDATING THE ACCOUNTS: THE ADJUSTING PROCESS
Which Accounts Need to Be Updated (Adjusted)?
Categories of Adjusting Entries
Prepaid Expenses
Depreciation of Property, Plant and Equipment
Accrued Expenses
Accrued Revenues
Unearned Revenues
Summary of the Adjusting Process
The Adjusted Trial Balance
PREPARING THE FINANCIAL STATEMENTS
Which Accounts Need to be Closed?
END-OF-CHAPTER SUMMARY PROBLEM
Demo Doc
4 Presentation of Financial Statements
SPOTLIGHT: BASF
ANNUAL REPORTS AS A COMMUNICATION TOOL
Substance Over Style
Obtaining Annual Reports
Typical Structure of an Annual Report
Corporate Information
Analysis and Commentaries
Other Statements and Disclosures
Financial Statements
GENERAL PRESENTATION REQUIREMENTS
Complete Set of Financial Statements
Fair Presentation and Compliance with IFRS
Going Concern
Accrual Basis of Accounting
Materiality and Aggregation
Offsetting
Frequency of Reporting
Comparative Information
Consistency of Presentation
MID-CHAPTER SUMMARY PROBLEM
STATEMENT OF FINANCIAL POSITION
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE ACCOUNTS
END-OF-CHAPTER SUMMARY PROBLEM
5 Internal Control, Cash, and Receivables
SPOTLIGHT: Nestlé
FRAUD AND ITS IMPACT
Ethics in Business and Accounting Decisions
INTERNAL CONTROL
The Sarbanes-Oxley Act (SOX)
INTERNAL CONTROL PROCEDURES
Smart Hiring Practices and Separation of Duties
Comparisons and Compliance Monitoring
Adequate Records
Limited Access
Proper Approvals
Information Technology
Internal Controls for e-Commerce
The Limitations of Internal Control—Costs and Benefits
INTERNAL CONTROL OVER CASH RECEIPTS
Cash Receipts Over the Counter
Cash Receipts by Mail
INTERNAL CONTROL OVER CASH PAYMENTS
Controls Over Payments by Cheque
USING A BANK ACCOUNT AS A CONTROL PROCEDURE
Preparing the Bank Reconciliation
Online Banking
MID-CHAPTER SUMMARY PROBLEM
USING A BUDGET TO MANAGE CASH
Reporting Cash on the Balance Sheet
ACCOUNTS AND NOTES RECEIVABLE
Types of Receivables
Internal Controls Over Cash Collections on Account
How Do We Manage the Risk of Not Collecting?
ACCOUNTING FOR UNCOLLECTIBLE RECEIVABLES
Allowance Method
Direct Write-Off Method
Computing Cash Collections from Customers
NOTES RECEIVABLE
Accounting for Notes Receivable
HOW TO SPEED UP CASH FLOW
Credit Card or Bankcard Sales
Selling (Factoring) Receivables
USING TWO KEY RATIOS TO MAKE DECISIONS
Current Ratio
Receivable Turnover and Collection Period
END-OF-CHAPTER SUMMARY PROBLEM
6 Inventory and Merchandizing Operations
SPOTLIGHT: Inditex
INVENTORY AND RETAILING OPERATIONS
Sale Price vs. Cost of Inventory
INVENTORY-RELATED TRANSACTIONS UNDER THE PERPETUAL SYSTEM
Inventory Systems
Recording Transactions in the Perpetual System
INVENTORY COSTING METHODS
Effects of FIFO, LIFO and Average Cost on Cost of Goods Sold, Gross Profit, and Ending Inventory
Comparison of the Inventory Methods
MID-CHAPTER SUMMARY PROBLEM
OTHER INVENTORY ISSUES
Comparability as an Enhancing Qualitative Characteristic
Why is LIFO not allowed under IFRS?
Net Realizable Value
Analyzing Financial Statements
Using the Cost-of-Goods-Sold Model
Estimating Inventory by the Gross Profit Method
Detailed Income Statement
Effects of Inventory Errors
COOKING THE BOOKS with Inventory: Crazy Eddie
END-OF-CHAPTER SUMMARY PROBLEM
APPENDIX 6A Accounting for Inventory in the Periodic System
7 PPE and Intangibles
SPOTLIGHT: Dairy Farm
TYPES OF NON-CURRENT ASSETS
Property, Plant and Equipment (PPE)
Intangible Assets
Other Non-Current Assets
INITIAL RECOGNITION AND MEASUREMENT OF PPE
Recognition of PPE and Intangible Assets
Measurement of PPE on Initial Recognition
Land and Land Improvements
Buildings, Machinery, and Equipment
Lump-Sum (or Basket) Purchases of Assets
Subsequent Costs
COOKING THE BOOKS by Improper Capitalization: WorldCom
ALLOCATING DEPRECIATION ON PPE
How to Allocate Depreciation
Depreciation Methods
Comparing Depreciation Methods
Choosing a Depreciation Method
MID-CHAPTER SUMMARY PROBLEM
OTHER ISSUES IN ACCOUNTING FOR PPE
Depreciation for Tax Purposes
Depreciation for Partial Years
Changes in Estimates of Useful Lives or Residual Values
COOKING THE BOOKS Through Depreciation: Waste Management
Impairment of PPE
Measurement Subsequent to Initial Recognition
Using Fully Depreciated Assets
ACCOUNTING FOR DISPOSAL OF PPE
T-Accounts for Analyzing PPE Transactions
ACCOUNTING FOR NATURAL RESOURCES
ACCOUNTING FOR INTANGIBLE ASSETS
Accounting for Specific Intangibles
Accounting for the Impairment of an Intangible Asset
Accounting for Research and Development Costs
REPORTING PPE TRANSACTIONS ON THE STATEMENT OF CASH FLOWS
Analyzing Financial Statements
END-OF-CHAPTER SUMMARY PROBLEM
8 Investments and International Operations
SPOTLIGHT: Vivendi
INVESTMENTS: AN OVERVIEW
Reporting Investments on the Balance Sheet
FINANCIAL ASSET INVESTMENTS
Trading Securities
Loans and Receivables
Held-to-maturity
Available-for-Sale Investments
Summary of Financial Assets Recognition and Measurements
EQUITY-METHOD INVESTMENTS
CONSOLIDATED SUBSIDIARIES
Consolidation Accounting
The Consolidated Balance Sheet and the Related Worksheet
Goodwill and Non-Controlling Interest
Income of a Consolidated Entity
COOKING THE BOOKS with Investments and Debt: Enron Corporation
MID-CHAPTER SUMMARY PROBLEMS
ACCOUNTING FOR INTERNATIONAL OPERATIONS
Foreign Currencies and Exchange Rates
Accounting for Foreign Currency Transactions
Reporting Gains and Losses on the Income Statement
Should We Hedge Our Foreign-Currency-Transaction Risk?
Consolidation of Foreign Subsidiaries
Analyzing Financial Statements
IMPACT OF INVESTING ACTIVITIES ON THE STATEMENT OF CASH FLOWS
END-OF-CHAPTER SUMMARY PROBLEM
9 Liabilities
SPOTLIGHT: GlaxoSmithKline (GSK)
LIABILITIES
Contingent Liabilities
Are All Liabilities Reported in the Balance Sheet?
COOKING THE BOOKS with Liabilities: Crazy Eddie, Inc.
SUMMARY OF CURRENT LIABILITIES
MID-CHAPTER SUMMARY PROBLEM
LONG-TERM LIABILITIES: BONDS
Bonds: An Introduction
Issuing Bonds Payable at Par (Face Value)
Issuing Bonds Payable at a Discount
What Is the Interest Expense on These Bonds Payable?
Interest Expense on Bonds Issued at a Discount
Partial-Period Interest Amounts
Issuing Bonds Payable at a Premium
The Straight-line Amortization Method: A Quick Way to Measure Interest Expense
Should We Retire Bonds Payable Before Their Maturity?
Convertible Bonds and Notes
LEASES
Types of Leases
Do Lessees Prefer Operating Leases or Capital Leases?
Financing Operations with Bonds or Shares?
Debt Ratio
The Times-Interest-Earned Ratio
REPORTING LIABILITIES
Reporting on the Balance Sheet
Reporting the Fair Market Value of Long-Term Debt
Reporting Financing Activities on the Statement of Cash Flows
END-OF-CHAPTER SUMMARY PROBLEM
10 Shareholders’ Equity
SPOTLIGHT: L’Occitane
WHAT’S THE BEST WAY TO ORGANIZE A BUSINESS?
ORGANIZING A CORPORATION
Shareholders’ Rights
Shareholders’ Equity
Classes of Shares
ISSUING SHARES
Ordinary Shares
Share Issuance for Other than Cash can Create an Ethical Challenge
Preference Shares
MID-CHAPTER SUMMARY PROBLEM
AUTHORIZED, ISSUED, AND OUTSTANDING SHARES
TREASURY SHARES
How is Treasury Share Recorded?
Resale of Treasury Shares
Issuing Treasury Shares as Compensation
Retiring Treasury Shares
RETAINED EARNINGS, DIVIDENDS, AND SPLITS
Should the Company Declare and Pay Cash Dividends?
Cash Dividends
Dividends on Preference Shares
Dividends on Cumulative and Non-cumulative Preference Shares
Share Dividends
Stock Splits
Summary of the Effects on Assets, Liabilities, and Shareholders’ Equity
MEASURING VALUE OF SHARES
Market, Redemption, Liquidation, and Book Value
Relating Profitability to a Company’s Shares
REPORTING SHAREHOLDERS’ EQUITY TRANSACTIONS
Statement of Cash Flows
END-OF-CHAPTER SUMMARY PROBLEM
11 The Statement of Cash Flows
SPOTLIGHT: Royal Philips Electronics
OVERVIEW OF STATEMENT OF CASH FLOWS
How’s Your Cash Flow? Telltale Signs of Financial Difficulty
Operating, Investing, and Financing Activities
Two Formats for Operating Activities
PREPARING CASH FLOWS FROM OPERATING ACTIVITIES: INDIRECT METHOD
Understanding Reconciliation of Net Income to Cash Flows from Operations
EVALUATING CASH FLOWS FROM INVESTING ACTIVITIES
PREPARING CASH FLOWS FROM FINANCING ACTIVITIES
Completing the Statement of Cash Flows (Indirect CFO)
Non-cash Investing and Financing Activities
MID-CHAPTER SUMMARY PROBLEM
PREPARING CASH FLOWS FROM OPERATING ACTIVITIES: DIRECT METHOD
Computing Operating Cash Flows by the Direct Method
ANALYZING THE STATEMENT OF CASH FLOWS
Free Cash Flow
Cash Realization Ratio
Examining Cash Flow Patterns
END-OF-CHAPTER SUMMARY PROBLEM
12 Financial Statement Analysis
SPOTLIGHT: Vodafone Group plc
HOW DOES AN INVESTOR EVALUATE A COMPANY?
HORIZONTAL ANALYSIS
Illustration: Vodafone
Trend Percentages
VERTICAL ANALYSIS
Illustration: Vodafone
BENCHMARKING
How Do We Compare One Company to Another?
MID-CHAPTER SUMMARY PROBLEM
USING RATIOS TO MAKE BUSINESS DECISIONS
Financial Ratios
Cash Conversion Cycle
Measuring Ability to Pay Current Liabilities
Measuring Ability to Pay Debts
Measuring Profitability
Analyzing Share Investments
Putting it All Together
Using the Statement of Cash Flows
OTHER ISSUES IN FINANCIAL STATEMENT ANALYSIS
Limitations of Ratio Analysis
Economic Value Added (EVA®)
Red Flags in Financial Statement Analysis
END-OF-CHAPTER SUMMARY PROBLEM
Appendix A VODAFONE GROUP PLC: ANNUAL REPORT EXCERPTS
Appendix B TIME VALUE OF MONEY: FUTURE VALUE AND PRESENT VALUE
Appendix C TYPICAL CHARTS OF ACCOUNTS FOR DIFFERENT TYPES OF BUSINESSES
Appendix D INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSS)
Glindex
Company Index

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