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Robert L. Dixon, Ph.D.,C.P.A., was Professor Emeritus of Accounting, University of Michigan.
Harold E. Arnett is Professor Emeritus of Accounting, University of Michigan.
Howard Davidoff, J.D. is an associate professor of economics at City University of New York.
Preface | p. xiii |
Instructions and Study Plan | p. xvii |
The Balance Sheet | p. 1 |
What Is a Balance Sheet? | p. 1 |
The Balance Sheet-What Good Is It? | p. 1 |
Does the Balance Sheet Really Show Financial Position? | p. 2 |
Does the Balance Sheet Actually Show What You Think It May? | p. 3 |
How Are Assets Valued? | p. 4 |
Why Are Nonmonetary Assets Reported at Cost? | p. 4 |
Balance Sheet Illustrations | p. 6 |
Balance Sheet Categories | p. 9 |
Balance Sheet Relationships | p. 10 |
Balance Sheet Terminology | p. 10 |
Test Problem | p. 11 |
Required | p. 11 |
Test Problem Solution Space | p. 11 |
The Income Statement | p. 12 |
What Is the Income Statement's Purpose? | p. 12 |
What Is Net Income? | p. 13 |
What Is Revenue? | p. 14 |
The Accrual Concept | p. 15 |
What Is an Expense? | p. 15 |
Some Other Offsets to Revenue | p. 17 |
What Are Income Taxes? | p. 17 |
Interest and Dividends | p. 18 |
Income Statement Illustrated | p. 18 |
Comments on Illustrative Income Statement | p. 19 |
Test Problem | p. 22 |
Revenue Data | p. 22 |
Expense Data | p. 22 |
Required | p. 23 |
Test Problem Solution Space | p. 23 |
The Accounting Structure | p. 24 |
Management Decisions | p. 24 |
Business Forms | p. 25 |
The Accounting Journal | p. 26 |
The Accounting Ledger | p. 26 |
The Ledger Account | p. 27 |
Asset and Expense Accounts | p. 28 |
Equity and Revenue Accounts | p. 30 |
The Process of Recording Complete Transactions | p. 31 |
The General Journal | p. 34 |
Comments on Figures 3.7 and 3.8 | p. 36 |
Closing Entries Revisited | p. 36 |
Use of Subsidiary Ledgers | p. 37 |
The Trial Balance | p. 38 |
The Financial Statements | p. 40 |
Conclusion | p. 40 |
Test Problem | p. 41 |
Transaction Data (Month of July) | p. 41 |
Test Problem Solution Space | p. 42 |
The Accounting Cycle | p. 44 |
Elements of the Accounting Cycle | p. 44 |
What Is Meant, by the Accounting Period? | p. 45 |
What and Why Are Adjusting Entries? | p. 46 |
Problem Data | p. 48 |
The Worksheet | p. 52 |
The Worksheet-Comments | p. 53 |
Financial Statements | p. 53 |
Are Interim Statements Dependable? | p. 56 |
Internal Control Structure | p. 58 |
Conclusion | p. 59 |
Test Problem | p. 59 |
Required | p. 59 |
Test Problem Solution Space | p. 60 |
Working Capital | p. 63 |
What Is Working Capital? | p. 63 |
Cash Receipts Transactions | p. 64 |
Cash Disbursement Transactions | p. 65 |
Marketable Securities | p. 66 |
Accounts Receivable | p. 67 |
Inventories | p. 69 |
Prepayments | p. 70 |
Current Liabilities | p. 71 |
What Can Your Accountants Do for You? | p. 72 |
The Budget | p. 72 |
The Cash Budget | p. 73 |
Comments on Cash Budget Illustration | p. 75 |
Control of Receivables | p. 76 |
Comments on Aging Schedule | p. 76 |
Test Problem | p. 78 |
Test Problem Solution Space | p. 79 |
Statement of Cash Flows | p. 80 |
Cash Receipts and Disbursement Statement | p. 80 |
Major Sources and Uses of Cash | p. 82 |
"Funds" Provided by Operations | p. 82 |
Extended Example | p. 89 |
Certain Noncash Items | p. 90 |
Test Problem | p. 91 |
Required | p. 92 |
Test Problem Solution Space | p. 92 |
Inventories | p. 93 |
What Are Inventories? | p. 93 |
Typical Inventory Transactions | p. 94 |
Inventory Valuation | p. 97 |
Specific Identification Method | p. 98 |
First-in, First-out | p. 99 |
What Are Inventory Profits and Holding Gains? | p. 100 |
Last-in, First-out | p. 102 |
Dollar Value LIFO | p. 103 |
Average Cost | p. 104 |
Cost or Market, the Lower | p. 104 |
Inventory Turnover | p. 105 |
Inventory Reports for Management | p. 105 |
Gross Profit (or Gross Margin) Method of Inventory Estimation | p. 106 |
Example | p. 106 |
Test Problem | p. 107 |
Required | p. 107 |
Test Problem Solution Space | p. 107 |
Property, Plant, and Equipment and Depreciation | p. 108 |
Classes of Noncurrent (Long-Term) Assets | p. 108 |
Initial Valuation of Property, Plant, and Equipment | p. 109 |
Historical Cost Less Depreciation | p. 111 |
Replacement Cost | p. 111 |
Depreciation of Property, Plant, and Equipment | p. 113 |
What Is Depreciation? | p. 113 |
Depreciation Patterns | p. 114 |
Straight-Line Depreciation | p. 114 |
Wavy-Line Depreciation | p. 115 |
Decreasing-Line Depreciation | p. 116 |
Composite and Group Depreciation | p. 117 |
Typical Depreciation Entries | p. 118 |
A Caveat | p. 119 |
Change of Depreciation Estimates | p. 119 |
Depreciation Fallacies | p. 120 |
Test Problem | p. 121 |
Required | p. 121 |
Test Problem Solution Space | p. 122 |
Corporation Accounts | p. 124 |
What Is Unique about Corporation Accounting? | p. 124 |
The Issue of Capital Stock with Par Value | p. 125 |
The Issue of Capital Stock with No Par Value | p. 126 |
The Issue of Capital Stock for Property | p. 126 |
Treasury Stock-What, Why, and How? | p. 127 |
Stock Splits-What, Why and How? | p. 130 |
Stock Rights | p. 131 |
Stock Options | p. 131 |
Stock Warrants | p. 132 |
Convertible Preferred Stock | p. 133 |
Callable Preferred Stock | p. 133 |
Common Stock Equivalents | p. 134 |
Earnings Per Share | p. 134 |
Organization Costs | p. 135 |
Test Problem | p. 136 |
Required | p. 136 |
Test Problem Solution Space | p. 137 |
Dividends and Reserves | p. 139 |
What Is a True Dividend? | p. 139 |
Corporate Investment in Affiliated Company | p. 141 |
Liquidating "Dividends" | p. 142 |
Stock Dividends | p. 143 |
What Do Accountants Mean by "Reserves"? | p. 145 |
Contra Accounts Used to Be Called Reserves | p. 145 |
Some Liabilities Used to Be Called Reserves | p. 146 |
Retained Earnings May Be Reserved | p. 146 |
Deferred Credits when in Doubt | p. 147 |
Cumulative Preferred Stock | p. 149 |
Test Problem | p. 150 |
Required | p. 150 |
Test Problem Solution Space | p. 150 |
Long-Term Debt | p. 151 |
Why Go into Debt? | p. 151 |
Installment Purchases | p. 152 |
Leases and Sale-and-Leaseback Transactions | p. 154 |
Long-Term Notes | p. 156 |
Mortgage Loans | p. 157 |
Mortgage and Debenture Bonds | p. 157 |
Sale of Bonds Between Interest Payment Dates | p. 162 |
Convertible Bonds | p. 163 |
Bonds with Warrants Attached | p. 164 |
Test Problem | p. 165 |
Required | p. 165 |
Test Problem Solution Space | p. 165 |
Basic Cost Accounting | p. 167 |
What Is Cost Accounting? | p. 167 |
What Are the Purposes of Cost Accounting? | p. 167 |
Job-Order versus Process Cost Accounting | p. 168 |
Use of Subsidiary Ledgers | p. 169 |
Job-Order Cost Accounting | p. 170 |
Process Cost Accounting | p. 174 |
Test Problem | p. 177 |
Test Problem Solution Space | p. 177 |
Cost Standards | p. 180 |
What's a Standard? | p. 180 |
Illustration of Standards-Standard Cost per Unit | p. 181 |
Raw Materials Standards | p. 181 |
Raw Materials Accounting-Standard Costs | p. 182 |
Direct Labor Accounting-Standard Costs | p. 184 |
Manufacturing Overhead Accounting-Standard Costs | p. 186 |
Standard Cost Applications | p. 189 |
Test Problem | p. 189 |
Required | p. 190 |
Test Problem Solution Space | p. 190 |
Internal Management Accounting | p. 192 |
The Concept of Management Accounting | p. 192 |
Responsibility Accounting | p. 193 |
Standard Costing | p. 193 |
Direct Costing | p. 194 |
Differential Costs and Related Decisions | p. 195 |
Should We Make It or Buy It? | p. 197 |
Decisions to Acquire Plant Assets | p. 199 |
Miscellaneous Topics | p. 202 |
Test Problem | p. 202 |
Test Problem Solution Space | p. 203 |
Federal Income Tax Concepts | p. 204 |
Taxpayers and Tax Returns | p. 205 |
Accounting Periods and Methods | p. 212 |
Income | p. 215 |
Deductions | p. 217 |
Property Transactions | p. 219 |
Credits Against Tax | p. 224 |
Rate Structure | p. 224 |
Tax Shelters | p. 225 |
Summary | p. 227 |
Test Problems | p. 227 |
Personal Computers and Software | p. 229 |
Acknowledgment | p. 232 |
Consolidated Statements | p. 233 |
What Is a Consolidated Statement? | p. 233 |
Why Isn't a Consolidated Statement a Combined Statement? | p. 234 |
Consolidation Buzz Words | p. 235 |
Elimination Entries | p. 238 |
Where Are Elimination Entries Recorded? | p. 241 |
Consolidation of Balance Sheets at Acquisition Date | p. 242 |
Consolidated Balance Sheet Sometime Later | p. 243 |
Consolidation of Income Statements | p. 246 |
Consolidated Statements-Conclusion | p. 247 |
Test Problem | p. 248 |
Required | p. 249 |
Test Problem Solution Space | p. 250 |
Income Tax Allocation | p. 252 |
Why Bother? | p. 252 |
What Conditions Make Interperiod Allocation Necessary? | p. 252 |
General Principles of Interperiod Allocation | p. 253 |
Revenue Recognized before It Is Taxed | p. 254 |
Expenses Recognized before They Become Tax Deductions | p. 256 |
Revenue Taxed before It Is Recognized | p. 257 |
Expenses as Tax Deductions before They Are Recognized | p. 258 |
Tax Allocation and Permanent Differences | p. 262 |
Arguments Against Tax Allocation | p. 262 |
Tax Allocation with in a Period | p. 262 |
Test Problems | p. 263 |
Business Combinations: Mergers, Acquisitions, and Consolidations | p. 264 |
How Business Combinations Are Achieved | p. 264 |
Valuation Using the Purchase Method | p. 265 |
The Physiology of an Acquisition Under the Purchase Method | p. 266 |
Impact of Acquisition Transaction on Income | p. 269 |
Required Disclosure under the Purchase Method | p. 270 |
Test Problem | p. 271 |
Required | p. 272 |
Test Problem Solution Space | p. 272 |
Accounting for Foreign Operations | p. 274 |
Our Foreign Relations | p. 274 |
Accounts Receivable | p. 274 |
Accounts Payable | p. 275 |
Foreign Branches | p. 275 |
Foreign Subsidiaries | p. 276 |
Accounting for Receivables and Payables | p. 276 |
Foreign Branch Accounting | p. 278 |
Foreign Currency Translation | p. 281 |
Identifying a Foreign Entity's Functional Currency | p. 282 |
Accounting for the Cumulative Translation Adjustment | p. 282 |
Solutions to Tests | p. 285 |
Supplementary Problems | p. 308 |
Solutions to Supplementary Problems | p. 333 |
Index | p. 367 |
Final Examination | p. 385 |
About the Authors | p. 403 |
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