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1 Accounting in Action 1-1
Knowing the Numbers: Columbia Sportswear 1-1
Accounting Activities and Users 1-3
The Building Blocks of Accounting 1-6
The Accounting Equation 1-11
Analyzing Business Transactions 1-13
The Financial Statements 1-21
Appendix 1A: Career Opportunities in Accounting 1-25
A Look at IFRS 1-47
2 The Recording Process 2-1
Accidents Happen: MF Global Holdings 2-1
Accounts, Debits, and Credits 2-2
The Journal 2-8
The Ledger and Posting 2-11
A Look at IFRS 2-46
3 Adjusting the Accounts 3-1
Keeping Track of Groupons: Groupon 3-1
Accrual-Basis Accounting and Adjusting Entries 3-2
Adjusting Entries for Deferrals 3-6
Adjusting Entries for Accruals 3-13
Adjusted Trial Balance and Financial Statements 3-20
Appendix 3A: Adjusting Entries for the Alternative Treatment of Deferrals 3-24
Appendix 3B: Financial Reporting Concepts 3-27
A Look at IFRS 3-56
4 Completing the Accounting Cycle 4-1
Everyone Likes to Win: Rhino Foods 4-1
The Worksheet 4-2
Closing the Books 4-8
The Accounting Cycle and Correcting Entries 4-16
Classified Balance Sheet 4-20
Appendix 4A: Reversing Entries 4-26
A Look at IFRS 4-54
5 Accounting for Merchandising Operations 5-1
Buy Now, Vote Later: REI 5-1
Merchandising Operations and Inventory Systems 5-3
Recording Purchases under a Perpetual System 5-6
Recording Sales Under a Perpetual System 5-11
The Accounting Cycle for a Merchandising Company 5-15
Multiple-Step and Comprehensive Income Statements 5-17
Appendix 5A: Merchandising Company Worksheet 5-22
Appendix 5B: Periodic Inventory System 5-24
A Look at IFRS 5-53
6 Inventories 6-1
“Where is That Spare Bulldozer Blade?”: Caterpillar 6-1
Classifying and Determining Inventory 6-2
Inventory Methods and Financial Effects 6-7
Effects of Inventory Errors 6-15
Inventory Presentation and Analysis 6-17
Appendix 6A: Inventory Cost Flow Methods in Perpetual Inventory Systems 6-20
Appendix 6B: Estimating Inventories 6-22
A Look at IFRS 6-47
7 Fraud, Internal Control, and Cash 7-1
Minding the Money in Madison: Barriques 7-1
Fraud and Internal Control 7-2
Cash Controls 7-11
Control Features of a Bank Account 7-19
Reporting Cash 7-27
A Look at IFRS 7-48
8 Accounting for Receivables 8-1
A Dose of Careful Management Keeps Receivables Healthy: Whitehall-Robins 8-1
Recognition of Accounts Receivable 8-2
Valuation and Disposition of Accounts Receivable 8-5
Notes Receivable 8-13
Presentation and Analysis of Receivables 8-18
A Look at IFRS 8-39
9 Plant Assets, Natural Resources, and Intangible Assets 9-1
How Much for a Ride to the Beach?: Rent-A-Wreck 9-1
Plant Asset Expenditures 9-2
Depreciation Methods 9-7
Plant Asset Disposals 9-14
Natural Resources and Intangible Assets 9-17
Statement Presentation and Analysis 9-21
Appendix 9A: Exchange of Plant Assets 9-23
10 Liabilities 10-1
Financing His Dreams: Wilbert Murdock 10-1
Accounting for Current Liabilities 10-3
Major Characteristics of Bonds 10-8
Accounting for Bond Transactions 10-12
Accounting for Long-Term Notes Payable 10-18
Reporting and Analyzing Liabilities 10-20
Appendix 10A: Straight-Line Amortization 10-24
Appendix 10B: Effective-Interest Amortization 10-26
A Look at IFRS 10-52
11 Corporations: Organization, Stock Transactions, and Stockholders’ Equity 11-1
Oh Well, I Guess I’ll Get Rich: Facebook 11-1
Corporate Form of Organization 11-2
Accounting for Stock Issuances 11-10
Dividends and Stock Splits 11-17
Reporting and Analyzing Stockholders’ Equity 11-25
Statement 11-30
Appendix 11B: Book Value per Share 11-31
A Look at IFRS 11-55
12 Statement of Cash Flows 12-1
Got Cash?: Microsoft 12-1
Usefulness and Format of the Statement of Cash Flows 12-3
Indirect Method 12-6
Analyzing the Statement of Cash Flows 12-17
Appendix 12A: Statement of Cash Flows—Direct Method 12-19
Appendix 12B: Worksheet for the Indirect Method 12-26
Approach 12-31
A Look at IFRS 12-58
13 Financial Analysis: The Big Picture 13-1
It Pays to Be Patient: Warren Buffett 13-2
Sustainable Income and Quality of Earnings 13-3
Ratio Analysis 13-14
A Look at IFRS 13-51
14 Managerial Accounting 14-1
Just Add Water . . . and Paddle: Current Designs 14-1
Managerial Accounting Basics 14-3
Managerial Cost Concepts 14-7
Manufacturing Costs in Financial Statements 14-10
Managerial Accounting Today 14-14
15 Job Order Costing 15-1
Profiting from the Silver Screen: Disney 15-1
Cost Accounting Systems 15-3
Assigning Manufacturing Costs 15-7
Predetermined Overhead Rates 15-12
Entries for Jobs Completed and Sold 15-15
Applied Manufacturing Overhead 15-20
16 Process Costing 16-1
The Little Guy Who Could: Jones Soda 16-1
Overview of Process Cost Systems 16-3
Process Cost Flow and Assigning Costs 16-6
Equivalent Units 16-9
The Production Cost Report 16-12
Appendix 16A: FIFO Method for Equivalent Units 16-17
17 Activity-Based Costing 17-1
Precor is on Your Side: Precor 17-1
Traditional vs. Activity-Based Costing 17-3
ABC and Manufacturers 17-7
ABC Benefits and Limitations 17-12
ABC and Service Industries 17-17
Appendix 17A: Just-in-Time Processing 17-21
18 Cost-Volume-Profit 18-1
Don’t Worry—Just Get Big: Amazon.com 18-1
Cost Behavior Analysis 18-2
Mixed Costs Analysis 18-7
Cost-Volume-Profit Analysis 18-10
Break-Even Analysis 18-14
Target Net Income and Margin of Safety 18-18
Appendix 18A: Regression Analysis 18-21
19 Cost-Volume-Profit Analysis: Additional Issues 19-1
Not Even a Flood Could Stop It: Whole Foods Market 19-1
Basic CVP Concepts 19-3
Sales Mix and Break-Even Sales 19-8
Sales Mix with Limited Resources 19-12
Operating Leverage and Profitability 19-14
Appendix 19A: Absorption Costing vs. Variable Costing 19-18
20 Incremental Analysis 20-1
Keeping It Clean: Method Products 20-1
Decision-Making and Incremental Analysis 20-3
Special Orders 20-6
Make or Buy 20-8
Sell or Process Further 20-10
Repair, Retain, or Replace Equipment 20-14
Eliminate Unprofitable Segment or Product 20-15
21 Pricing 21-1
They’ve Got Your Size—and Color: Zappos.com 21-1
Target Costing 21-3
Cost-Plus and Variable-Cost Pricing 21-5
Time-and-Material Pricing 21-10
Transfer Prices 21-13
Variable-Cost Pricing 21-19
Different Countries 21-23
22 Budgetary Planning 22-1
What’s in Your Cupcake?: BabyCakes NYC 22-1
Effective Budgeting and the Master Budget 22-3
Sales, Production, and Direct Materials Budgets 22-8
Expense Budgets 22-13
Cash Budget and Budgeted Balance Sheet 22-17
Companies 22-22
23 Budgetary Control and Responsibility Accounting 23-1
Pumpkin Madeleines and a Movie: Tribeca Grand Hotel 23-1
Budgetary Control and Static Budget Reports 23-3
Flexible Budget Reports 23-6
Responsibility Accounting and Responsibility Centers 23-13
Investment Centers 23-22
Appendix 23A: ROI vs. Residual Income 23-26
24 Standard Costs and Balanced Scorecard 24-1
80,000 Different Caffeinated Combinations: Starbucks 24-2
Overview of Standard Costs 24-3
Direct Materials Variances 24-7
Direct Labor and Manufacturing Overhead Variances 24-11
Variance Reports and Balanced Scorecards 24-16
Appendix 24A: Standard Cost Accounting System 24-20
and Volume Variances 24-23
25 Planning for Capital Investments 25-1
Floating Hotels: Holland America Line 25-2
Capital Budgeting and Cash Payback 25-3
Net Present Value Method 25-6
Capital Budgeting Challenges and Refinements 25-11
Internal Rate of Return 25-16
Annual Rate of Return 25-18
Appendix A Specimen Financial Statements: Apple Inc. A-1
Appendix B Specimen Financial Statements: PepsiCo, Inc. B-1
Appendix C Specimen Financial Statements: The Coca-Cola Company C-1
Appendix D Specimen Financial Statements: Amazon.com, Inc. D-1
Appendix E Specimen Financial Statements: Wal-Mart Stores, Inc. E-1
Appendix F Specimen Financial Statements: Louis Vuitton F-1
Appendix G Time Value of Money G-1
Interest and Future Values G-1
Nature of Interest G-1
Future Value of a Single Amount G-3
Future Value of an Annuity G-5
Present Values G-7
Present Value Variables G-7
Present Value of a Single Amount G-7
Present Value of an Annuity G-9
Time Periods and Discounting G-11
Present Value of a Long-Term Note or Bond G-11
Capital Budgeting Situations G-14
Using Financial Calculators G-15
Present Value of a Single Sum G-16
Present Value of an Annuity G-17
Future Value of a Single Sum G-17
Future Value of an Annuity G-17
Internal Rate of Return G-18
Useful Applications of the Financial Calculator G-18
Appendix H Reporting and Analyzing Investments H-1
Accounting for Debt Investments H-1
Why Corporations Invest H-1
Accounting for Debt Investments H-3
Accounting for Stock Investments H-4
Holdings of Less than 20% H-4
Holdings Between 20% and 50% H-5
Holdings of More than 50% H-6
Reporting Investments in Financial Statements H-7
Debt Securities H-7
Equity Securities H-10
Balance Sheet Presentation H-11
Presentation of Realized and Unrealized Gain or Loss H-12
Appendix I Payroll Accounting* I-1
Recording the Payroll I-1
Determining the Payroll I-2
Recording the Payroll I-5
Employer Payroll Taxes I-7
FICA Taxes I-8
Federal Unemployment Taxes I-8
State Unemployment Taxes I-8
Recording Employer Payroll Taxes I-8
Filing and Remitting Payroll Taxes I-9
Internal Control for Payroll I-10
Appendix J Subsidiary Ledgers and Special Journals* J-1
Subsidiary Ledger J-1
Subsidiary Ledger Example J-2
Advantages of Subsidiary Ledgers J-3
Special Journals J-4
Sales Journal J-4
Cash Receipts Journal J-7
Purchases Journal J-10
Cash Payments Journal J-13
Effects of Special Journals on the General Journal J-15
Cybersecurity: A Final Comment J-16
Appendix K Other Significant Liabilities* K-1
Contingent Liabilities K-1
Reporting a Contingent Liability K-2
Disclosure of Contingent Liabilities K-3
Lease Liabilities K-3
Accounting for Lease Arrangements K-4
Balance Sheet Presentation K-4
Income Statement Presentation K-4
Additional Employee Compensation Benefits K-4
Paid Absences K-4
Postretirement Benefits K-5
Cases for Managerial Decision-Making*
Company Index I-1
Subject Index I-5
