Description
- Why Is Accounting Important?
- Decision Makers: The Users of Accounting Information
- Accounting Matters
- What Are the Organizations and Rules That Govern Accounting?
- Governing Organizations
- Generally Accepted Accounting Principles
- The Economic Entity Assumption
- The Cost Principle
- The Going Concern Assumption
- The Monetary Unit Assumption
- International Financial Reporting Standards
- Ethics in Accounting and Business
- What Is the Accounting Equation?
- Assets
- Liabilities
- Equity
- How Do You Analyze a Transaction?
- Transaction Analysis for Smart Touch Learning
- How Do You Prepare Financial Statements?
- Income Statement
- Statement of Retained Earnings
- Balance Sheet
- Statement of Cash Flows
- How Do You Use Financial Statements to Evaluate Business Performance?
- Kohl’s Corporation
- Return on Assets (ROA)
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 2 RECORDING BUSINESS TRANSACTIONS
- What Is an Account?
- Assets
- Liabilities
- Equity
- Chart of Accounts
- Ledger
- What Is Double-Entry Accounting?
- The T-Account
- Increases and Decreases in the Accounts
- Expanding the Rules of Debit and Credit
- The Normal Balance of an Account
- Determining the Balance of a T-Account
- How Do You Record Transactions?
- Source Documents—The Origin of the Transactions
- Journalizing and Posting Transactions
- The Ledger Accounts After Posting
- The Four-Column Account: An Alternative to the T-Account
- What Is the Trial Balance?
- Preparing Financial Statements from the Trial Balance
- Correcting Trial Balance Errors
- How Do You Use the Debt Ratio to Evaluate Business Performance?
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 3 THE ADJUSTING PROCESS
- What Is the Difference Between Cash Basis Accounting and Accrual Basis Accounting?
- What Concepts and Principles Apply to Accrual Basis Accounting?
- The Time Period Concept
- The Revenue Recognition Principle
- The Matching Principle
- What Are Adjusting Entries, and How Do We Record Them?
- Deferred Expenses
- Accrued Expenses
- Accrued Revenues
- What Is the Purpose of the Adjusted Trial Balance, and How Do We Prepare It?
- What Is the Impact Of Adjusting Entries On the Financial Statements?
- How Could a Worksheet Help in Preparing Adjusting Entries and the Adjusted Trial Balance?
- APPENDIX 3A: Alternative Treatment of Recording Deferred Expenses and Deferred Revenues
- What Is an Alternative Treatment of Recording Deferred Expenses and Deferred Revenues?
- Deferred Expenses
- Deferred Revenues
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 4 COMPLETING THE ACCOUNTING CYCLE
- How Do We Prepare Financial Statements?
- Relationships Among the Financial Statements
- Classified Balance Sheet
- How Could a Worksheet Help in Preparing Financial Statements?
- Section 5—Income Statement
- Section 6—Balance Sheet
- Section 7—Determine Net Income or Net Loss
- What Is the Closing Process, and How Do We Close the Accounts?
- Closing Temporary Accounts—Net Income for the Period
- Closing Temporary Accounts—Net Loss for the Period
- Closing Temporary Accounts—Summary
- How Do We Prepare a Post-Closing Trial Balance?
- What Is the Accounting Cycle?
- How Do We Use the Current Ratio to Evaluate Business Performance?
- APPENDIX 4A: Reversing Entries: An Optional Step
- What Are Reversing Entries?
- Accounting for Accrued Expenses
- Accounting Without a Reversing Entry
- Accounting With a Reversing Entry
- Review
- Assess Your Progress
- Critical Thinking
- Comprehensive Problem 1 for Chapters 1–4
- Comprehensive Problem 2 for Chapters 1–4
CHAPTER 5 MERCHANDISING OPERATIONS
- What Are Merchandising Operations?
- The Operating Cycle of a Merchandising Business
- Merchandise Inventory Systems: Perpetual and Periodic Inventory Systems
- How Are Purchases of Merchandise Inventory Recorded in a Perpetual Inventory System?
- Purchase of Merchandise Inventory
- Purchase Discounts
- Purchase Returns and Allowances
- Transportation Costs
- Cost of Inventory Purchased
- How Are Sales of Merchandise Inventory Recorded in a Perpetual Inventory System?
- Cash and Credit Card Sales
- Sales on Account
- Sales Discounts
- Sales Returns and Allowances
- Transportation Costs—Freight Out
- What Are the Adjusting and Closing Entries For a Merchandiser?
- Adjusting Merchandise Inventory Based on a Physical Count
- Closing the Accounts of a Merchandiser
- How Are a Merchandiser’s Financial Statements Prepared?
- Income Statement
- Statement of Retained Earnings and the Balance Sheet
- How Do We Use the Gross Profit Percentage to Evaluate Business Performance?
- APPENDIX 5A: Accounting for Multiple Peformance Obligations
- How Are Multiple Performance Obligations Recorded in a Perpetual Inventory System?
- APPENDIX 5B: Accounting for Merchandise Inventory in a Periodic Inventory System
- How Are Merchandise Inventory Transactions Recorded in a Periodic Inventory System?
- Purchases of Merchandise Inventory
- Sales of Merchandise Inventory
- Preparing Financial Statements
- Adjusting and Closing Entries
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 6 MERCHANDISE INVENTORY
- What Are the Accounting Principles and Controls That Relate to Merchandise Inventory?
- Accounting Principles
- Control Over Merchandise Inventory
- How Are Merchandise Inventory Costs Determined Under a Perpetual Inventory System?
- Specific Identification Method
- First-In, First-Out (FIFO) Method
- Last-In, First-Out (LIFO) Method
- Weighted-Average Method
- How Are Financial Statements Affected by Using Different Inventory Costing Methods?
- Income Statement
- Balance Sheet
- How Is Merchandise Inventory Valued When Using the Lower-of-Cost-or-Market Rule?
- Computing the Lower-of-Cost-or-Market
- Recording the Adjusting Journal Entry to Adjust Merchandise Inventory
- What Are the Effects of Merchandise Inventory Errors on the Financial Statements?
- How Do We Use Inventory Turnover and Days’ Sales in Inventory to Evaluate Business Performance?
- Inventory Turnover
- Days’ Sales in Inventory
- APPENDIX 6A: Merchandise Inventory Costs Under a Periodic Inventory System
- How Are Merchandise Inventory Costs Determined Under a Periodic Inventory System?
- First-In, First Out (FIFO) Method
- Last-In, First-Out (LIFO) Method
- Weighted-Average Method
- Review
- Assess Your Progress
- Critical Thinking
- Comprehensive Problem for Chapters 5 and 6
CHAPTER 7 INTERNAL CONTROL AND CASH
- What Is Internal Control, and How Can It Be Used to Protect a Company’s Assets?
- Internal Control and the Sarbanes-Oxley Act
- The Components of Internal Control
- Internal Control Procedures
- The Limitations of Internal Control—Costs and Benefits
- What Are the Internal Control Procedures With Respect to Cash Receipts?
- Cash Receipts Over the Counter
- Cash Receipts by Mail
- What Are the Internal Control Procedures With Respect to Cash Payments?
- Controls Over Payment by Check
- How Can a Petty Cash Fund Be Used for Internal Control Purposes?
- Setting Up the Petty Cash Fund
- Replenishing the Petty Cash Fund
- Changing the Amount of the Petty Cash Fund
- How Are Credit Card Sales Recorded?
- How Can the Bank Account Be Used as a Control Device?
- Signature Card
- Deposit Ticket
- Check
- Bank Statement
- Electronic Funds Transfers
- Bank Reconciliation
- Examining a Bank Reconciliation
- Journalizing Transactions from the Bank Reconciliation
- How Can the Cash Ratio Be Used to Evaluate Business Performance?
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 8 RECEIVABLES
- What Are Common Types of Receivables, and How Are Credit Sales Recorded?
- Types of Receivables
- Exercising Internal Control Over Receivables
- Recording Sales on Credit
- Decreasing Collection Time and Credit Risk
- How Are Uncollectibles Accounted for When Using the Direct Write-Off Method?
- Recording and Writing Off Uncollectible Accounts—Direct Write-off Method
- Recovery of Accounts Previously Written Off—Direct Write-off Method
- Limitations of the Direct Write-off Method
- How Are Uncollectibles Accounted For When Using the Allowance Method?
- Recording Bad Debts Expense—Allowance Method
- Writing Off Uncollectible Accounts—Allowance Method
- Recovery of Accounts Previously Written Off—Allowance Method
- Estimating and Recording Bad Debts Expense—Allowance Method
- Comparison of Accounting for Uncollectibles
- How Are Notes Receivable Accounted For?
- Identifying Maturity Date
- Computing Interest on a Note
- Accruing Interest Revenue and Recording Honored Notes Receivable
- Recording Dishonored Notes Receivable
- How Do We Use the Acid-Test Ratio, Accounts Receivable Turnover Ratio, and Days’ Sales in Receivab
- Acid-Test (or Quick) Ratio
- Accounts Receivable Turnover Ratio
- Days’ Sales in Receivables
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 9 PLANT ASSETS, NATURAL RESOURCES, AND INTANGIBLES
- How Does a Business Measure the Cost of Property, Plant, and Equipment?
- Land and Land Improvements
- Buildings
- Machinery and Equipment
- Furniture and Fixtures
- Lump-Sum Purchase
- Capital and Revenue Expenditures
- What Is Depreciation, and How Is It Computed?
- Factors in Computing Depreciation
- Depreciation Methods
- Partial-Year Depreciation
- Changing Estimates of a Depreciable Asset
- Reporting Property, Plant, and Equipment
- How Are Disposals of Plant Assets Recorded?
- Discarding Plant Assets
- Selling Plant Assets
- How Are Natural Resources Accounted For?
- How Are Intangible Assets Accounted For?
- Accounting for Intangibles
- Specific Intangibles
- Reporting of Intangible Assets
- How Do We Use the Asset Turnover Ratio to Evaluate Business Performance?
- APPENDIX 9A: Exchanging Plant Assets
- How Are Exchanges of Plant Assets Accounted For?
- Exchange of Plant Assets–Gain Situation
- Exchange of Plant Assets–Loss Situation
- Review
- Assess Your Progress
- Critical Thinking
- Comprehensive Problem for Chapters 7, 8, and 9
CHAPTER 10 INVESTMENTS
- Why Do Companies Invest?
- Debt Securities Versus Equity Securities
- Reasons to Invest
- Classification and Reporting of Investments
- How Are Investments in Debt Securities Accounted For?
- Purchase of Debt Securities
- Interest Revenue
- Disposition at Maturity
- How Are Investments in Equity Securities Accounted For?
- Equity Securities with No Significant Influence
- Equity Securities with Significant Influence (Equity Method)
- Equity Securities with Control (Consolidations)
- How Are Debt and Equity Securities Reported?
- Trading Debt Investments
- Available-for-Sale Debt Investments
- Held-to-Maturity Debt Investments
- Equity Investments with No Significant Influence
- How Do We Use the Rate of Return on Total Assets to Evaluate Business Performance?
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 11 CURRENT LIABILITIES AND PAYROLL
- How Are Current Liabilities of Known Amounts Accounted For?
- Accounts Payable
- Sales Tax Payable
- Income Tax Payable
- Unearned Revenues
- Short-term Notes Payable
- Current Portion of Long-term Notes Payable
- How Do Companies Account For and Record Payroll?
- Gross Pay and Net (Take-Home) Pay
- Employee Payroll Withholding Deductions
- Payroll Register
- Journalizing Employee Payroll
- Employer Payroll Taxes
- Payment of Employer Payroll Taxes and Employees’ Withholdings
- Internal Control Over Payroll
- How Are Current Liabilities That Must Be Estimated Accounted For?
- Bonus Plans
- Vacation, Health, and Pension Benefits
- Warranties
- How Are Contingent Liabilities Accounted For?
- Remote Contingent Liability
- Reasonably Possible Contingent Liability
- Probable Contingent Liability
- How Do We Use the Times-Interest-Earned Ratio to Evaluate Business Performance?
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 12 LONG-TERM LIABILITIES
- How Are Long-Term Notes Payable and Mortgages Payable Accounted For?
- Long-term Notes Payable
- Mortgages Payable
- What Are Bonds?
- Types of Bonds
- Bond Prices
- Present Value and Future Value
- Bond Interest Rates
- Issuing Bonds Versus Issuing Stock
- How Are Bonds Payable Accounted For Using the Straight-Line Amortization Method?
- Issuing Bonds Payable at Face Value
- Issuing Bonds Payable at a Discount
- Issuing Bonds Payable at a Premium
- How Is the Retirement of Bonds Payable Accounted For?
- Retirement of Bonds at Maturity
- Retirement of Bonds Before Maturity
- How Are Liabilities Reported On the Balance Sheet?
- How Do We Use the Debt to Equity Ratio to Evaluate Business Performance?
- APPENDIX 12A: The Time Value of Money
- What Is the Time Value of Money, and How Is Present Value and Future Value Calculated?
- Time Value of Money Concepts
- Present Value of a Lump Sum
- Present Value of an Annuity
- Present Value of Bonds Payable
- Future Value of a Lump Sum
- Future Value of an Annuity
- APPENDIX 12B: Effective-Interest Method of Amortization
- How Are Bonds Payable Accounted For Using the Effective-Interest Amortization Method?
- Effective-Interest Amortization for a Bond Discount
- Effective-Interest Amortization of a Bond Premium
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 13 STOCKHOLDERS’ EQUITY
- What Is A Corporation?
- Characteristics of Corporations
- Stockholders’ Equity Basics
- How Is the Issuance of Stock Accounted For?
- Issuing Common Stock at Par Value
- Issuing Common Stock at a Premium
- Issuing No-Par Common Stock
- Issuing Stated Value Common Stock
- Issuing Common Stock for Assets Other Than Cash
- Issuing Preferred Stock
- How Is Treasury Stock Accounted For?
- Treasury Stock Basics
- Purchase of Treasury Stock
- Sale of Treasury Stock
- Retirement of Stock
- How Are Dividends and Stock Splits Accounted For?
- Cash Dividends
- Stock Dividends
- Cash Dividends, Stock Dividends, and Stock Splits Compared
- How Is the Complete Corporate Income Statement Prepared?
- Continuing Operations
- Discontinued Operations
- Earnings per Share
- How Is Equity Reported For a Corporation?
- Statement of Retained Earnings
- Statement of Stockholders’ Equity
- How Do We Use Stockholders’ Equity Ratios to Evaluate Business Performance?
- Earnings per Share
- Price/Earnings Ratio
- Rate of Return on Common Stockholders’ Equity
- Review
- Assess Your Progress
- Critical Thinking
- Comprehensive Problem for Chapters 11, 12, and 13
CHAPTER 14 THE STATEMENT OF CASH FLOWS
- What Is the Statement of Cash Flows?
- Purpose of the Statement of Cash Flows
- Classification of Cash Flows
- Two Formats for Operating Activities
- How Is the Statement of Cash Flows Prepared Using the Indirect Method?
- Cash Flows from Operating Activities
- Cash Flows from Investing Activities
- Cash Flows from Financing Activities
- Net Change in Cash and Cash Balances
- Non-cash Investing and Financing Activities
- How Do We Use Free Cash Flow to Evaluate Business Performance?
- APPENDIX 14A: Preparing the Statement of Cash Flows by the Direct Method
- How Is the Statement of Cash Flows Prepared Using the Direct Method?
- Cash Flows from Operating Activities
- APPENDIX 14B: Preparing the Indirect Statement of Cash Flows Using a Spreadsheet
- How Is the Statement of Cash Flows Prepared Using the Indirect Method And a Spreadsheet?
- Review
- Assess Your Progress
- Critical Thinking
CHAPTER 15 FINANCIAL STATEMENT ANALYSIS
- How Are Financial Statements Used to Analyze a Business?
- Purpose of Analysis
- Tools of Analysis
- Corporate Financial Reports
- How Do We Use Horizontal Analysis to Analyze a Business?
- Horizontal Analysis of the Income Statement
- Horizontal Analysis of the Balance Sheet
- Trend Analysis
- How Do We Use Vertical Analysis to Analyze a Business?
- Vertical Analysis of the Income Statement
- Vertical Analysis of the Balance Sheet
- Common-Size Statements
- Benchmarking
- How Do We Use Ratios to Analyze a Business?
- Evaluating the Ability to Pay Current Liabilities
- Evaluating the Ability to Sell Merchandise Inventory and Collect Receivables
- Evaluating the Ability to Pay Long-term Debt
- Evaluating Profitability
- Evaluating Stock as an Investment
- Red Flags in Financial Statement Analyses
- Review
- Assess Your Progress
- Critical Thinking
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