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