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Chapter 13 Corporations: Organization and Capital Stock Transactions 606
Feature Story: What’s Cooking? 606
The Corporate Form of Organization 608
Characteristics of a Corporation 608
Forming a Corporation 610
Stockholder Rights 612
Stock Issue Considerations 612
Corporate Capital 615
Accounting for Issues of Common Stock 617
Issuing Par Value Common Stock for Cash 618
Issuing No-Par Common Stock for Cash 618
Issuing Common Stock for Services or Noncash Assets 619
Accounting for Treasury Stock 620
Purchase of Treasury Stock 621
Disposal of Treasury Stock 622
Accounting for Preferred Stock 624
Dividend Preferences 625
Liquidation Preference 625
Statement Presentation 626
A Look at IFRS 644
Chapter 14 Corporations: Dividends, Retained Earnings, and Income Reporting 648
Feature Story: Owning a Piece of the Action 648
Dividends 650
Cash Dividends 650
Stock Dividends 654
Stock Splits 656
Retained Earnings 658
Retained Earnings Restrictions 658
Prior Period Adjustments 659
Retained Earnings Statement 660
Statement Presentation and Analysis 661
Presentation 661
Analysis 662
Income Statement Presentation 663
Income Statement Analysis 663
A Look at IFRS 682
Chapter 15 Long-Term Liabilities 684
Feature Story: And Then There Were Two 684
Bond Basics 686
Types of Bonds 687
Issuing Procedures 687
Determining the Market Price of a Bond 688
Accounting for Bond Issues 690
Issuing Bonds at Face Value 690
Discount or Premium on Bonds 691
Issuing Bonds at a Discount 692
Issuing Bonds at a Premium 693
Accounting for Bond Redemptions 694
Redeeming Bonds at Maturity 695
Redeeming Bonds before Maturity 695
Converting Bonds into Common Stock 695
Accounting for Other Long-Term Liabilities 696
Long-Term Notes Payable 696
Lease Liabilities 699
Statement Presentation and Analysis 700
Presentation 700
Analysis 701
APPENDIX 15A Present Value Concepts Related to Bond Pricing 705
Present Value of a Single Amount 706
Present Value of Interest Payments (Annuities) 707
Time Periods and Discounting 709
Computing the Present Value of a Bond 709
APPENDIX 15B Effective-Interest Method of Bond Amortization 711
Amortizing Bond Discount 711
Amortizing Bond Premium 713
APPENDIX 15C
Straight-Line Amortization 715
Amortizing Bond Discount 715
Amortizing Bond Premium 716
A Look at IFRS 735
Chapter 16 Investments 738
Feature Story: “Is There Anything Else We Can Buy?” 738
Why Corporations Invest 740
Accounting for Debt Investments 741
Recording Acquisition of Bonds 741
Recording Bond Interest 741
Recording Sale of Bonds 742
Accounting for Stock Investments 743
Holdings of Less than 20% 743
Holdings Between 20% and 50% 743
Holdings of More than 50% 743
Valuing and Reporting Investments 748
Categories of Securities 748
Balance Sheet Presentation 752
Presentation of Realized and Unrealized Gain or Loss 753
Classified Balance Sheet 754
A Look at IFRS 773
Chapter 17 Statement of Cash Flows 776
Feature Story: Got Cash? 776
The Statement of Cash Flows: Usefulness and Format 778
Usefulness of the Statement of Cash Flows 778
Classification of Cash Flows 778
Significant Noncash Activities 780
Format of the Statement of Cash Flows 780
Preparing the Statement of Cash Flows 782
Indirect and Direct Methods 782
Preparing the Statement of Cash Flows—Indirect Method 783
Step 1: Operating Activities 784
Summary of Conversion to Net Cash Provided by Operating Activities—Indirect Method 788
Step 2: Investing and Financing Activities 789
Step 3: Net Change in Cash 790
Using Cash Flows to Evaluate a Company 793
Free Cash Flow 793
APPENDIX 17A Statement of Cash Flows—Direct Method 798
Step 1: Operating Activities 799
Step 2: Investing and Financing Activities 803
Step 3: Net Change in Cash 805
APPENDIX 17B Using a Worksheet to Prepare the Statement of Cash Flows—Indirect Method 806
Preparing the Worksheet 807
A Look at IFRS 837
Chapter 18 Financial Statement Analysis 840
Feature Story: It Pays to Be Patient 840
Basics of Financial Statement Analysis 842
Need for Comparative Analysis 842
Tools of Analysis 842
Horizontal Analysis 843
Balance Sheet 844
Income Statement 844
Retained Earnings Statement 845
Vertical Analysis 846
Balance Sheet 846
Income Statement 847
Ratio Analysis 848
Liquidity Ratios 850
Profitability Ratios 853
Solvency Ratios 857
Summary of Ratios 858
Earning Power and Irregular Items 861
Discontinued Operations 861
Extraordinary Items 862
Changes in Accounting Principle 863
Comprehensive Income 864
Quality of Earnings 865
Alternative Accounting Methods 865
Pro Forma Income 865
Improper Recognition 866
A Look at IFRS 889
Chapter 19 Managerial Accounting 892
Feature Story: Just Add Water . . . and Paddle 892
Managerial Accounting Basics 894
Comparing Managerial and Financial Accounting 894
Management Functions 894
Organizational Structure 896
Business Ethics 897
Managerial Cost Concepts 899
Manufacturing Costs 899
Product versus Period Costs 901
Manufacturing Costs in Financial Statements 902
Income Statement 902
Cost of Goods Manufactured 903
Cost of Goods Manufactured Schedule 904
Balance Sheet 905
Cost Concepts—A Review 906
Product Costing for Service Industries 908
Managerial Accounting Today 909
Focus on the Value Chain 909
Balanced Scorecard 910
Corporate Social Responsibility 911
Chapter 20 Job Order Costing 938
Feature Story: She Succeeds Where Others Have Failed 938
Cost Accounting Systems 940
Job Order Cost System 940
Process Cost System 940
Job Order Cost Flow 941
Accumulating Manufacturing Costs 942
Assigning Manufacturing Costs to Work in Process 944
Manufacturing Overhead Costs 948
Assigning Costs to Finished Goods 952
Assigning Costs to Cost of Goods Sold 953
Summary of Job Order Cost Flows 954
Job Order Costing for Service Companies 955
Advantages and Disadvantages of Job Order Costing 957
Reporting Job Cost Data 958
Under- or Overapplied Manufacturing Overhead 958
Chapter 21 Process Costing 982
Feature Story: Ben & Jerry’s Tracks Its Mix-Ups 982
The Nature of Process Cost Systems 984
Uses of Process Cost Systems 984
Process Costing for Service Companies 985
Similarities and Differences Between Job Order Cost and Process Cost Systems 985
Process Cost Flow 987
Assigning Manufacturing Costs—Journal Entries 987
Equivalent Units 990
Weighted-Average Method 990
Refinements on the Weighted-Average Method 991
Production Cost Report 993
Compute the Physical Unit Flow (Step 1) 994
Compute Equivalent Units of Production (Step 2) 994
Compute Unit Production Costs (Step 3) 995
Prepare a Cost Reconciliation Schedule (Step 4) 995
Preparing the Production Cost Report 996
Costing Systems—Final Comments 998
Contemporary Developments 998
Just-in-Time Processing 998
Activity-Based Costing 1000
APPENDIX 21A Example of Traditional Costing versus Activity-Based Costing 1006
Production and Cost Data 1006
Unit Costs Under Traditional Costing 1006
Unit Costs Under ABC 1006
Comparing Unit Costs 1007
Benefits of ABC 1008
Limitations of ABC 1008
Chapter 22 Cost-Volume-Profit 1030
Feature Story: Don’t Worry—Just Get Big 1030
Cost Behavior Analysis 1032
Variable Costs 1032
Fixed Costs 1033
Relevant Range 1034
Mixed Costs 1035
Importance of Identifying Variable and Fixed Costs 1039
Cost-Volume-Profit Analysis 1040
Basic Components 1040
CVP Income Statement 1040
Break-Even Analysis 1043
Target Net Income 1047
Margin of Safety 1048
CVP and Changes in the Business Environment 1050
CVP Income Statement Revisited 1052
APPENDIX 22A Variable Costing 1055
Example Comparing Absorption Costing with Variable Costing 1055
Absorption Costing Example 1056
Variable Costing Example 1056
Rationale for Variable Costing 1058
Chapter 23 Budgetary Planning 1074
Feature Story: Was This the Next Amazon.com? Not Quite 1074
Budgeting Basics 1076
Budgeting and Accounting 1076
The Benefits of Budgeting 1076
Essentials of Effective Budgeting 1076
Length of the Budget Period 1077
The Budgeting Process 1077
Budgeting and Human Behavior 1078
Budgeting and Long-Range Planning 1079
The Master Budget 1079
Preparing the Operating Budgets 1081
Sales Budget 1081
Production Budget 1082
Direct Materials Budget 1084
Direct Labor Budget 1086
Manufacturing Overhead Budget 1087
Selling and Administrative Expense Budget 1087
Budgeted Income Statement 1089
Preparing the Financial Budgets 1090
Cash Budget 1090
Budgeted Balance Sheet 1093
Budgeting in Nonmanufacturing Companies 1095
Merchandisers 1095
Service Enterprises 1096
Not-for-Profit Organizations 1096
Chapter 24 Budgetary Control and Responsibility Accounting 1122
Feature Story: Turning Trash into Treasure 1122
Budgetary Control 1124
Static Budget Reports 1125
Examples 1125
Uses and Limitations 1126
Flexible Budgets 1126
Why Flexible Budgets? 1127
Developing the Flexible Budget 1128
Flexible Budget—A Case Study 1130
Flexible Budget Reports 1133
Responsibility Accounting 1135
Controllable versus Noncontrollable Revenues and Costs 1137
Principles of Performance Evaluation 1137
Responsibility Reporting System 1139
Types of Responsibility Centers 1142
Responsibility Accounting for Cost Centers 1143
Responsibility Accounting for Profit Centers 1143
Responsibility Accounting for Investment Centers 1145
Chapter 25 Standard Costs and Balanced Scorecard 1176
Feature Story: 80,000 Different Caffeinated Combinations 1176
The Need for Standards 1178
Distinguishing Between Standards and Budgets 1178
Why Standard Costs? 1178
Setting Standard Costs 1178
Ideal versus Normal Standards 1179
A Case Study 1180
Analyzing and Reporting Variances from Standards 1184
Direct Materials Variances 1185
Direct Labor Variances 1188
Manufacturing Overhead Variances 1190
Reporting Variances 1193
Statement Presentation of Variances 1193
Balanced Scorecard 1194
APPENDIX 25A Standard Cost Accounting System 1200
Journal Entries 1200
Ledger Accounts 1202
APPENDIX 25B A Closer Look at Overhead Variances 1203
Overhead Controllable Variance 1203
Overhead Volume Variance 1204
Chapter 26 Incremental Analysis and Capital Budgeting 1226
Feature Story: Make It or Buy It? 1226
Incremental Analysis 1228
Management’s Decision-Making Process 1228
Incremental Analysis Approach 1228
How Incremental Analysis Works 1229
Accept an Order at a Special Price 1230
Make or Buy 1232
Sell or Process Further 1234
Repair, Retain, or Replace Equipment 1235
Eliminate an Unprofitable Segment or Product 1236
Allocate Limited Resources 1239
Capital Budgeting 1240
Evaluation Process 1240
Annual Rate of Return 1241
Cash Payback 1243
Discounted Cash Flow 1245
Comparing Discounted Cash Flow Methods 1249
Appendix A Specimen Financial Statements: Apple Inc. A1
Appendix B Specimen Financial Statements: PepsiCo, Inc. B1
Appendix C Specimen Financial Statements: The Coca-Cola Company C1
Appendix D Specimen Financial Statements: Amazon.com, Inc. D1
Appendix E Specimen Financial Statements: Wal-Mart Stores, Inc. E1
Appendix F Specimen Financial Statements: Zetar plc F1
Appendix G Time Value of Money G1
Nature of Interest G1
Simple Interest G1
Compound Interest G2
Present Value Variables G3
Present Value of a Single Amount G3
Present Value of an Annuity G5
Time Periods and Discounting G7
Computing the Present Value of a Long-Term Note or Bond G7
Appendix H (available online at www.wiley.com/college/weygandt)
Using Financial Calculators H1
Present Value of a Single Sum H1
Plus and Minus H2
Compounding Periods H2
Rounding H2
Present Value of an Annuity H2
Useful Applications of the Financial Calculator H3
Auto Loan H3
Mortgage Loan Amount H3
Appendix I (available online at www.wiley.com/college/weygandt)
Standards of Ethical Conduct for Management Accountants I1
IMA Statement of Ethical Professional Practice I1
Principles I1
Standards I1
Resolution of Ethical Conflict I2
company index IN-1
subject index IN-3
